The Long-Term Impact of the Epidemic on the United States…

The long-term impact of the epidemic on the United States: manufacturing rebound, service “younger”, rising inflation.

The outbreak of the 2020 epidemic has distorted the structure of the U.S. economy. While service consumption has been suppressed, the demand for real estate and durable goods has increased sharply. However, the impact of the epidemic on the US economy is not only a short-term structural shock, but also at least three long-term effects.

First, the epidemic has accelerated the upgrading of American industries. The Biden administration has assisted emerging industries to reduce external dependence, and the proportion of American manufacturing will now rebound. After the Second World War, the U.S. manufacturing industry shrank sharply. Factors such as high local labor costs, outdated industrial equipment, and labor skills mismatch mean that the return of traditional manufacturing is extremely costly. Therefore, the return of manufacturing that the United States is trying to promote is extremely difficult. After the epidemic, Biden changed his course, or replaced the “return of manufacturing industry” with “expanding new industries”. Under the resonance of factors such as real estate, infrastructure and new industrial policies, the proportion of the US manufacturing industry will now rise in the next 8 years, and subdivisions such as machinery and new energy vehicles will expand. However, the rising share of the manufacturing industry will not be able to reverse the long-term weakness of the U.S. dollar, because all economies are in the emerging industry competition stage, and the world will be in a state of moderate inflation in the next 8-10 years. At the same time, the traditional manufacturing industry depends on foreign countries, the real estate upward cycle, and shale oil. The prospect of a crude oil trade deficit reappearing after the supply is reduced indicates that the overall US trade deficit is difficult to converge.

Second, there have been some structural changes in the US job market after every economic recession since the 1970s. After the current round of economic recession, industrial development and the impact of the epidemic will also trigger two changes in the employment structure in the United States: the proportion of manufacturing employment has rebounded; the service industry “rejuvenated.” 1) In the next 8 years, under the policy promotion and the real estate upswing cycle continues to resonate, the proportion of manufacturing in the United States will rebound and the proportion of the service industry will decline slightly, the employment structure will also show a rebound in the proportion of manufacturing employment and a decline in the proportion of services in the service industry. The trend. 2) The impact of each wave of epidemic rebound on the US economy has gradually weakened, but the impact on the people’s psychology and behavior may continue. As the older the age, the higher the risk of contracting the new crown and the higher the risk of severe illness. If the vaccine does not significantly reduce the risk of infection, then some people in the 50+ age group may retire and leave the job market early. This will make the overall U.S. labor force involved in employment slightly younger “Finance”, and focus on service industries other than finance and public management.

Third, under the three-factor resonance, the US inflation center will be significantly higher than 2010-2019 in the next 8 years. 1) The world enters the second half of the fourth round of industrial transfer, the inflation center is already higher than before the epidemic, and factors such as the competition of new industries in the United States and major economies will boost demand for physical assets; 2) The labor supply or marginal reduction in the service sector, service-oriented The inflation center is likely to be higher than before the epidemic; 3) After the epidemic, the Biden government encourages new energy and restricts shale oil. The crude oil price center will also rise for a long time.

The outbreak of the 2020 epidemic has distorted the structure of the U.S. economy. While service consumption has been suppressed, the demand for real estate and durable goods has increased sharply. Although this change is unprecedented, it is only a short-term change after the epidemic and does not require further investigation. However, the impact of the epidemic on the U.S. economy is not only a short-term structural shock, but also at least three long-term effects: the industrial structure changes, and the proportion of the U.S. manufacturing industry is expected to rebound slightly; the employment structure changes, and the proportion of manufacturing employment is rebounding. At the same time, practitioners in the service industry may now be “younger”; after the epidemic, the world has entered the second half of industrial transfer, the recovery of US service-oriented inflation, and new energy policies restrict shale oil supply and other factors will make the US inflation center higher than the pre-epidemic level.