The slowdown in the US economy in the first quarter of this year, following the implementation of restrictions to slow the spread of the Coronavirus, led to the largest recession in the history of the country, according to US business experts.
The US Department of Commerce’s picture released of the situation of 2020 underscores analysts’ predictions that the US economy will sink into recession.
According to Sang Won-sun, a professor of business economics in Los Angeles, the US economy is in free fall and the country may be in a much worse position than during the Great Recession.
In the nearly 11 months since the coronavirus forced companies around the world to close office doors, economists have paid a lot of attention to bankruptcies of family businesses, shops, bars, restaurants, and large chains. But they have largely overlooked the looming threat to a much larger and more powerful galaxy of companies worth trillions of dollars a year in GDP and revolving around a single, grossly underestimated economic agent – the USA Economy office worker.
A huge part of our economy depends on USA Office Economy
The decision of many companies around the world not to return to their offices has turned the city’s once-overcrowded business districts and business centers into ghostly places. The result has been the paralysis of a rarely mentioned USA Office Economy ecosystem with close to 100 million workers.
Meanwhile, USA Office workers previously fueled a “hidden” economy, where business travel accounted for 60% to 70% of all airline revenues.
And the massive shift to remote work continues to gain momentum. In recent months, many companies, including, Ford Motor, and Twitter, have said they see telecommuting as their main format for the next few years. Pinterest announced it would pay a contractual penalty of $ 89.5 million to cancel a lease on a new 490,000-square-foot luxury office building planned in San Francisco, citing a permanent move to remote work.
But now, MIT economist David Autor suggests, the office economy is under threat. The pandemic has forced companies to massively switch to remote work.
The implications for the office economy are clear
Business travel in July was down 97% from the previous year and airlines are estimated to lose $ 2 trillion due to a lack of corporate travel.
Meanwhile, a less visible victim of the telecommute revolution was Xerox, whose revenues fell 34.6% in the last quarter as many offices closed and failed to make planned purchases.
The shift in the office ecosystem is hitting the economies of large cities
A striking example is the real estate market. Average rents in major cities fell 6.1%, the largest decline in 9 years. A large number of people leave megacities to reduce real estate costs because now there is no need to be physically present at work.
The problem is so great that it threatens the economies of the cities themselves.
Regardless of the duration of the pandemic – USA companies will have to change very seriously
During World War II, the United States bombed Tokyo and other major Japanese cities, destroying much of the economy. But within a decade and a half, most of them recovered substantially, and after another 15 years or so, local companies and workforces challenged the United States to dominate the world in key industries such as automobiles and electronics.
Of course, 15 years is a very long recovery period, which will have devastating and irreversible consequences for a whole generation of entrepreneurs and workers. Regardless of the length of the recovery, it is likely that airlines, offices, and hotels will have to downsize, die, or reinvent. And as a result of a deep, accelerated transformation, cities will also have to rethink themselves, which will seriously hit the long-term national GDP for the country as a whole.
But even if offices do not open on the same scale, many of the USA Office Economy workers will be able to move to less expensive locations and work comfortably remotely, because this is the format behind the future.