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The coronavirus crisis will eventually pass. But life on the other side will look different than it did before. Here are some ways Covid-19 could change companies, governments—and you: https://www.barrons.com/articles/how-the-coronavirus-crisis-is-changing-consumers-and-businesses-51586533282
• Throughout history, Americans have grown more cautious in the aftermath of an economic crisis. After the Great Depression, personal savings rates rocketed from next to nothing to a record 28%.
The shock from the Covid-19 pandemic, coupled with the selloff in markets and job losses, could push consumers to ramp up their savings—including those who are still employed, says Torsten Sløk, chief economist at Deutsche Bank Securities.
• The pandemic jolted people out of their routines and created new habits as they turned to the internet to shop for groceries, socialize and go to work. This could push companies to let more people work remotely—and to reconsider their sprawling office space.
• With more business being handled online, travel could decline in favor of videoconferencing. Leisure travel, too, could drop as people choose to stay more local to avoid the hassles of travel restrictions.
• Seeing business evaporate will make companies rethink their own rainy-day funds—and after years of loading up on cheap debt, companies are apt to favor more cash. The strong will probably emerge stronger, as robust balance sheets let them take market share.
• The pandemic has brought significant operational challenges, with companies unable to get crucial parts because of distant supply chains. Executives are talking about regionalization and hubs to produce goods in one area rather than globalization.
• There will be political and social pressures on companies, as the pandemic highlighted inequality in the country. Lower-wage workers with less than a high-school degree working in small businesses have been among the first to lose their jobs.
“What the crisis has shown is that our economy was very strong, but our social fabric and labor wasn’t,” says Afsaneh Mashayekhi Beschloss, founder of Rock Creek Group. “Societies and economies have a way of resetting themselves. The question is if it will become more balanced.”
• Seeing older people homeless and impoverished during the Depression led to Social Security—now the major source of income for many retirees. The crisis could bring similar pressure to provide health care and paid sick leave, and to remake the health-care system more broadly.
• The pandemic could usher in a wave of regulation, which could include increasing safety measures at nursing homes, measures to better prepare the health-care system, and efforts to reduce dependence on other countries for strategic goods, says Deutsche Bank’s Sløk.
• The crisis could undo globalization more than the trade war did if countries retreat inward rather than work together to tackle a pandemic that doesn’t abide by borders and ravages their interlinked economies. It’s not clear yet which way they will go.
For more potential changes—and how they could impact the economy—read the full article in Barron's. https://www.barrons.com/articles/how-the-coronavirus-crisis-is-changing-consumers-and-businesses-51586533282
