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A New “Economic Normal” Will Emerge From the COVID-19 Crisis

A New “Economic Normal” Will Emerge From the COVID-19 Crisis
By Adam Sharp
Date April 21, 2020

“Disruption” is an overused word. But in the COVID-19 world we live in, it’s undeniably a major force.

I’m hopeful we’ll get over this crisis in the next few months. But even when that happens, things won’t go back to normal. Here are a few things I see changing for good…

Going forward, a lot more people will work from home. It is cheaper for the company, saves hours of commuting per day and allows high-risk populations to avoid possible infection (from COVID-19 and other diseases).

Because of this, it seems likely that oil prices will remain low for an extended period. Of course, some high-cost oil producers will go bankrupt. And there will be less oil coming onto the market. But it seems that for the next few years, oil prices are likely to stay lower than recent averages.

Another change I don’t see going away is the drop in consumer spending. People will begin to save more and pay off debt. This is actually a very healthy thing over the medium and long run. But in the short term, it’s going to be painful. Consumer spending accounts for 70% of the U.S. economy. And that sure seems likely to change.

The COVID-19 crisis has also exposed extreme flaws in our current economic models. We rely on countries that are thousands of miles away for almost all our goods. I believe we will start to move away from this. Of course, it will take a long time to break our reliance on foreign manufacturing. But it seems that this crisis has at least started to wake people up to the risks of economies that rely on globalized supply chains. And that might be the biggest long-term change moving forward.

My point is that even after the coronavirus crisis is over, things are unlikely to return to normal. And this disruption will create incredible opportunities for startup investors. In the coming weeks, I’ll try to outline where I think the best opportunities are.

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