Nearly a year into a pandemic that has ravaged the global economy like no time since the Great Depression, the only clear pathway toward improved fortunes is containing the virus itself.
With the United States suffering its most rampant transmission yet, and with major nations in Europe again under lockdown, prospects remain grim for a meaningful worldwide recovery before the middle of next year, and far longer in some economies. Substantial job growth could take longer still.
A significant hope has emerged this month in the form of three vaccine candidates, easing fears that humanity could be subject to years of intermittent, wealth-destroying lockdowns. But significant hurdles remain before vaccines restore any semblance of normalcy. More tests must be conducted, and vast supplies manufactured. The world must navigate the complexities of distributing a life-saving medicine amid a surge of nationalism.
The very concept of normalcy now seems open to question. Even after the coronavirus is tamed into something familiar and manageable like the flu, will people habituated to keeping their distance from others return to restaurants, shopping malls and entertainment venues in the same numbers? With videoconferencing established as a replacement for business travel, will companies shell out as much as before to put them on airplanes and in hotels?
Calculating the prospects for a vigorous economic recovery entails wrestling with questions of human nature. The Depression imprinted a generation with a tendency toward thriftiness and an aversion to risk. If frugality endures this time, that would have profound and enduring economic consequences: Consumer spending typically makes up two-thirds of economic activity in countries like the United States and Britain.
“If you’re a business, you might be a bit more wary about taking on staff again,” said Ben May, a global economist at Oxford Economics in London. “You might make do with overtime for a while. Households might behave more cautiously. If that’s the case, you run the risk of economic scarring further down the line.”
Long-term damage on top of the recent economic devastation would add to the inequality that has been a central feature of recent decades, as people with greater education, advanced skills and access to stock and real estate markets harvested the winnings of expansion, while others struggled.
The pandemic has made the world more so. It has concentrated its lethal force on blue-collar workers, for whom human interaction is a necessity, striking people who labor in warehouses, slaughterhouses and frontline medical facilities. Professionals able to work from home have maintained their safety along with their incomes.
The industries that face the greatest challenges in recovering — airlines, hotels, restaurants and retail — are major employers of lower-skilled workers, and especially…
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