Yesterday at a virtual forum on central banking, the FED chairman Jerome Powell said he believed that the economy we knew before the pandemic was probably a thing of the past. As he put it ‘We're recovering, but to a different economy’. For sure the virus has accelerated existing trends in society and the economy, including the use of technology, especially for the older generation, which will have lasting effects on how people work and live. Although the technological advances, and the use of them are positive for societies over the long term, Powell thinks that in the shorter term they will create disruption, and as the market adjusts to the new normal the pain isn't going to be shared evenly.
He gave examples of those groups the new ‘norm’ is going to affect more than others. It’s likely lower-paid workers along with retail and hospitality will shoulder most of the burden. These groups are heavily tilted towards minorities and women, and have already been among those most affected by pandemic redundancies. ‘Even after the unemployment rate goes down and there's a vaccine, there's going to be a probably substantial group of workers who are going to need support as they're finding their way in the post-pandemic economy, because it's going to be different in some fundamental way’ Powell said.
Also speaking at the forum was Christine Lagarde, the ECB president. She warned that despite the encouraging news about a vaccine the eurozone recovery would be ‘unsteady’, at least in the short term. ‘Until widespread immunity is achieved’ Lagarde said, ‘we could still face recurring cycles of accelerating viral spread and tightening restrictions’.