Despite resilient economy, elected leaders must prioritize post-COVID opportunity
The 2020 election will undoubtedly be a pivotal moment in our nation’s history. Yet while the country is transfixed on Nov. 3 and the U.S. economy is likely to continue moving in a positive direction regardless of the outcome, we must not become complacent.
No matter who is elected, our leaders must prioritize the improvement of labor conditions, public health and safety. Doing so will accelerate the return to desperately needed economic strength as we continue enduring an unprecedented pandemic.
The past decade has seen an incredible period of sustained growth. COVID-19 introduced ongoing uncertainty and fragility into our lives and the economy. Thankfully, the underlying fundamentals to support private sector growth remain strong.
Prior to the pandemic, banks and enterprises were largely in sound cash positions in part due to reforms that came out of the 2008 financial crisis. The strong position allowed these companies to survive the difficult spring, pivot business models as necessary, and resume putting capital to work.
Interest rates remain low, and all signs point to the Federal Reserve keeping them that way. Access to capital appears to be in a position to support the economy for years to come.
At a macro level, labor market tightness (extremely low unemployment rates) constrains economic growth. This restraint has been widespread in recent years. Newly added elasticity in the labor market is good for economic growth, but obviously the good news has to be taken in context.
Unemployment has damaged the lives of millions this year, and that suffering should never be discounted. The human cost is real, and it is important the public and private sectors work together to connect displaced workers to training and new job opportunities.
Much like labor market conditions, automation provides contrasting influence on the economic outlook. Automation accelerated as a result of the pandemic and, consequently, organizations across the globe proved they can operate successfully with a diminishing number of employees.
At a fundamental level, the economy’s ability to improve efficiency and resiliency is positive. This also means many of today’s jobs will not exist in years to come. Since the industrial revolution, the economy has been a product of combining human and machine resources. Today is no different. We must once again work together to mitigate damages and increase opportunities considering this ongoing shift.
It seems we have the capital, labor and technology necessary for the economy to heal from this year’s disruptions and resume a positive trajectory. Elections have consequences, and regardless of the results, there will likely be some government actions with which the private sector disagrees. Those disagreements could lead to both positive and negative economic outcomes, which will combine to support an economy that is similar to that of pre-COVID times.
So, what could derail our economic recovery and near-term growth?
The obvious contenders are public health and safety. These two components function in tandem because businesses and workers cannot be successful without daily stability. The longer the U.S. struggles to defeat COVID-19, the longer it will take us to capitalize on these strong underlying economic fundamentals.
Likewise—while our country should fully embrace Americans’ sacred right to peacefully protest and acknowledge valid frustrations—civil unrest is objectively damaging to the economy. Elected officials, business leaders, workers, law enforcement and citizens must come together, find common ground and address these issues in a peaceful and productive manner.
Another key factor is the labor market, which is currently in the midst of a major realignment. For hundreds of millions of global workers, when, how and where they do their jobs will never be the same. It will take time, flexibility and creativity to navigate the new environment.
Misalignment will cause companies to have problems with hiring/retention, reduce productivity/innovation and damage culture. Companies can overcome these challenges successfully, but those that take a long time to get it right will struggle, which could drag on the economy.
Give Nov. 3 all of the respect and attention it deserves. U.S. voters are fortunate to participate in the election of our government, so, by all means, vote! Regardless of the results, the direction of the economy will continue to point up. The biggest challenge for our newly elected leaders—and all Americans—is how we utilize a positive economy to make our country better and provide more opportunities for our children and future generations?