expressed opinion entrepreneur Contributors are themselves.
Let us pray together that the worst of the pandemic is over. Now that we’ve done that, let’s talk about what the “new normal” will look like.
Outside the back office and on the shop floor, the dramatic changes that have rocked the business over the past three years are finally starting to stabilize. Here’s how key trends in spending and staffing might change.
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Say goodbye to consumption fluctuations
For much of the pandemic, people have focused their spending on items that can be delivered and consumed at home. Going out wasn’t really an option, and even if it were, there were risks and restrictions – so they ordered takeout and saved for better days.
Those better days came last spring. Armed with a full booster and a full bank account, consumers leave home in droves for restaurant meals, concerts, sporting events, and flights to where the sun shines. It’s an economy-changing combination: pent-up demand for services, a desire to “revenge” on the pandemic, and a lot of cash.
The result has been an unprecedented shift in spending that has caught even the biggest retailers by surprise. They see demand for their products increasing month-on-month. Supply chains are strained under the pressure of record orders. But then all those dollars diverted to services, and inventories started piling up.
Retailers find themselves with more merchandise than they need. The pressure on the supply chain started to abate, and by the fourth quarter of this year, the supply chain felt about the same as it did before the pandemic hit in February 2020. Orders fell during the holiday season as retailers had to sell what they already had.
By 2023, almost all of this will be different. Faced with a downturn, consumers typically cut back on discretionary items like graduation parties and trips to theme parks. While there are still some reports of “you only live once” travel, much of the pent-up demand for leisure and hospitality services may have disappeared.
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In addition, the vast savings consumers paid for these services have been wiped out. Federal Reserve researchers estimate that in the first 18 months of the pandemic, households amassed more than $2 trillion in excess savings — money they would not have saved under normal circumstances. As of October, about a quarter of that money had been spent, and the savings rate had fallen below pre-pandemic levels.
With the stock market off its highs, record credit card rates, continued rapid inflation and shifts in holiday spending, even more excess savings will be gone by the time spring comes again. It’s hard to imagine services provided outside the home experiencing the same surge in 2023 as in 2022, so the balance between spending on goods and services throughout the year may be more similar to what it was before the pandemic.
Hello new workplace – even for in-person workers
Just as spending habits are likely to stabilize, so too will employee preferences for work. Clearly, the pandemic has accelerated the long-term trend of remote work. Some businesses are now deciding to stick with fully remote work, while others are adopting a hybrid model for the long term. The demand for expensive office space has dropped dramatically and permanently, as has the demand for all the services that employees need close to those offices.
This new reality has also created a geographical shift in spending. Remote work has sparked a huge income shift from cities to suburbs. Most of the money that office workers bring to the city’s lunch counters, hair salons, public transit systems and more is now closer to home.
As a result, workplaces may also shift for face-to-face employees. But warehouse workers, food servers, and cleaners who find flexible shifts on my company’s platform still can’t work from home. Their wages rose early in the pandemic, and they deserved it; they came to work taking an extra risk. There may be less risk at work now, but there is persistent stress at home.
Related: You should let your team decide their approach to hybrid work. A behavioral economist explains why and how you should.
Child care has become more expensive and harder to find, and the pandemic has created a shortage of home care services. As breadwinners have more responsibilities outside of work, they need more flexibility when working in person. That’s the key to one of the biggest changes in the labor market.
Before the pandemic, companies used flexi-working as a way to supplement their labor supply, scheduling workers to work overtime when demand for goods and services peaked. But now, flexible working is becoming part of the core payroll.
Earlier this year, I visited a business partner who had built our roster of professionals who were available for booking on a weekly basis, mostly for full-time positions. Shifts are always filled, but not always with the same professionals. efficient. Managers are happy to have a large pool of trained professionals who can do all the required shifts with no absences – which they wouldn’t if there were a fixed number of permanent employees – and professionals are happy that they can spend their time anytime closure.
The trend toward more flexible workplaces of all kinds will also help stabilize much of the economy. For businesses, having a steady supply of labor helps keep production running smoothly. For consumers, being able to fine-tune their income helps reduce volatility in spending. The economy still faces some headwinds and risks in 2023, but the mantra of the three-year ordeal may ultimately be: make progress while maintaining stability.