It’s more than two-and-a-half years later and the COVID pandemic is still producing surprising effects in the economy.
We’re now seeing the flipside of changes that occurred during the lockdown phase. Back then, the common wisdom was that COVID was altering people’s behaviour in ways that would permanently affect the where we work, shop and even exercise.
Booming e-commerce sales, the soaring price of residential and vacation properties and rocketing cryptocurrencies were just a few of the phenomena that seemed to confirm something revolutionary was happening.
Now, with the reopening of the economy, many of formerly hot trends have cooled if not fizzled altogether.
For example, it turns out shoppers still want to go to the mall to feel and try products before buying. The result has been a rebound in physical retail sales and a slowdown in the growth rate of e-commerce. That’s hurt e-commerce giant Shopify and other tech companies that bet heavily on a continued online shopping surge.
Meanwhile, liquidation centres are full of bikes, gardening equipment and other stuff that people rushed to buy during the lockdowns.
Retailers loaded up on inventory only to find consumers no longer wanted it. They’ve either returned to a more normal way of life or cut spending because of inflation and fears of a recession. Sadly, people are even trying to unload their “pandemic pets.”
We all know that rising interest rates have caused a slowdown in the housing market. What may be less obvious is that the hardest hit segment is cottage country, according to RBC. There, prices rose strongly during the pandemic when people were looking to get out of town. Now, many are saddled with large, increasingly expensive mortgages on second homes and are looking to offload them.
There have been other distortions flowing from the reopening of the economy, notably the crush at passport offices and airports as seemingly everyone catches up on missed travel at the same time.
One pandemic trend that does seem to have legs is working from home. Faced with potential employee resistance to being forced back to the office at a time of labour shortages, many companies have opted to offer their staff a hybrid work formula. However, this article suggests that offices – at least in smaller U.S. cities – are filling up through the week.
What are we to conclude from these developments? We often get excited when we see what appears to be momentous change happening in the economy. But change tends to happen more slowly than we expect. Usually, it turns out to be an evolution not a revolution.
We saw this during the dot.com bubble in the late 1990s. In those days, everyone could see the Internet’s potential to revolutionize many aspects of our lives, but it took years for its promise to be fulfilled.
In the current situation, it looks like many of areas of the economy that were supercharged by the pandemic are now returning to their original trend line.
If change is slow and inherently unpredictable, a broadly diversified investment portfolio will always be in vogue no matter what next big thing is making headlines.