Pandemic Aftershocks and Economic Recovery Prospects
By Jason Schenker
U.S. business investment and global manufacturing fell into recession in 2019. After the Fed cut rates and began re-expanding its balance sheet last year, 2020 was poised to be the year when business investment and global manufacturing recovered.
But then COVID-19 happened, and it shattered the 2020 outlook.
Economic activity stopped, joblessness surged and businesses went into survival mode. Monetary and fiscal policies were rapidly deployed to keep the economy on an even keel—at least as much as possible. As we consider some of the economic chaos of the first half of the year, let’s look at two likely expectations and two big uncertainties for the second half of the year and beyond.
1. Supply chain importance
Many people may not have fully understood supply chains and why they matter. They blissfully enjoyed whatever they wanted, whenever they wanted it. But the COVID-19 pandemic revealed supply chain to be critical for individual consumption, companies, government and even national security.
The new prioritized place of supply chain in the eyes of business and political leaders should be a boon for material handling industries that help the economy work. After all, there is likely to be a retrenchment in priorities, and material handling and supply chain will be cornerstones of strategic planning in a post-pandemic world.
Due to “shelter in place” orders, the importance of brick and mortar retail stores has been slashed, while e-commerce demand has booked.
A positive likely outcome for MHI members, overall, is that there is likely to be continued future expansion of warehouse and distribution centers, as well as an increased trend of material handling equipment purchases. This means that even if the near-term economic outlook is still a bit uncertain, the trend is likely to be favorable for material handling equipment manufacturers and service providers.
2. More remote work and education
The potential for more remote work and online education has been out there for some time. In fact, these are topics I wrote about extensively in my book, Jobs for Robots, which was released over three years ago, in February 2017.
The COVID-19 pandemic created a watershed moment, in which millions of people crossed the Rubicon of remote work and online education. Many will not see a way back.