Analysts from Goldman Sachs expect the economy to be more productive over the next few years thanks to three digital trends that have been accelerated by the coronavirus pandemic and are unlikely to fade away in the near- to medium-term.
The analysts said the first factor is the continued acceleration of e-commerce—a sector that saw three years’ worth of market-share gain in 2020 alone as business restrictions and closures drove consumers online.
The second is the continuation of remote work for about a quarter of the workforce beyond the pandemic—the analysts said GDP and productivity could see a boost when the time and money saved by cutting down on commuting, in-person meetings and office spaces is repurposed in other, more profitable ways.
The last factor is what Goldman’s analysts call “creative destruction”—the closures of unsuccessful and unprofitable businesses—during the pandemic, though they note that the scale of these closures is much smaller than it was in the aftermath of the 2008 financial crisis.
All together, the analysts said they expect those three factors to boost economic productivity by at least 2%—and potentially as much as 6.7%—by 2022.
“While the reopening of the economy and the improvement in public health have already boosted traffic at malls, restaurants, and worksites,” Goldman’s analysts wrote, “we believe many of the pandemic-driven shifts in consumption patterns and time usage are unlikely to reverse—particularly those related to the digitization of economic and social activity.”
3.9%. That’s the baseline productivity boost Goldman’s analysts are expecting over the next three years, or 1.3% per year on an annualized basis.
A recent working paper from the Becker Friedman Institute at the University of Chicago found that work-from-home arrangements are likely to continue after the pandemic abates, with 20% of work days completed at home compared to 5% of workdays completed at home before the pandemic. The researchers expect a 5% productivity increase as a result of that shift.