The Economist May 1st 2021 pp59-60 |Finance & economics|The economic recovery|”Money, machines and mayhem” “A post-pandemic boom is beginning in the rich world. History suggest that things are about to get interesting”
Read The Economist article for all detail
Image from VOXEU.ORG GINI is an academic measure of inequality
Summary provided by 2244
Probably appreciated by only a few of us, there’s actually a large history of what happens economically and socially after major events like wars and pandemics-Cholera (France 1830s, WWI & Spanish Flu (1919-1920), WWII (1941-1945), SARS (2003), MERS (2012), Ebola (2014) and Zika( 2016).
Not wanting to infect workers there’s generally been an increase in automation and this article suggests that and recent reports, not mentioned in the article, indicate that spending for manufacturing robotics in up 20% (Los Angeles Times May 4, 2021|4AM “As COVID-19 wanes, employers are accelerating the use of robots. Where does that leave workers?” by Don Lee).
As it turns out wages tend to rise, due in part to fewer unaffected workers, and generally “attitudes may shift towards workers.” At the same time ”…policy makers across the world are less interested in reducing public debt or warding off inflation than they are in getting unemployment down.”
Good news is that economies have thrived after a pandemic for good reason including pent-up demand, excess savings and increasing opportunities to sell. The same is expected following covid-19 in rich countries. The data indicates that pre-pandemic GDP (% increase on a year earlier) averaged for 2016-2019 ~2% (USA), ~1.5% (France), ~1.3% (Britain), 2% (Canada), 1% (Italy), ~1.6% (Germany) and ~0.8% in Japan while the 2021 forecast is for meaningful gains in GDP estimated at ~6.2% (USA), ~6% (France), ~5.2% (Britain), 5% (Canada), ~4.1% (Italy) ,~3.5% (Germany), ~3.1% (Japan).
Households typically save during these crises, wanting to conserve and generally finding few opportunities to buy, and history suggests than spending does surge post-pandemics but is still somewhat restrained. The authors suggest there’s a kind of hangover from being a “sick and tired nation.” In fact, this phenomenon may keep inflation in check as noted “Consumer caution may be one reason why there is little evidence of inflation." In pandemics, a chart from the article shows that inflation in the years leading up to an event may range from -1% to +2% historically (1300s-2018) and that in the months following an event inflation is near zero for the first ten months and then may oscillate between zero and two percent from 10-20 months after. And while folks are cautious with spending having seen such devastation in the home-land they are more willing to seek change by relocating and even trying new ways of making money like starting a company-there is ample evidence of this today.
Socially it is reported (London School of Economics) “that covid-19 has made people across Europe adverse to inequality." This aligns with past history which also suggests that “those on the wrong side of the bargain to look for redress.” The IMF reports concludes that “social unrest seems to peak two years after the pandemic ends.” See the Change in GINI Net in image above from VOXEU.ORG
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