HOW THE PANDEMIC CHANGED THE U.

S ECONOMY

After a pandemic-fueled roller coaster, the U.S. economy is finally steadying.

Four years ago this week, the first wave of what would grow to be 20 million job losses set in, although
most Americans were more terrified of catching a new, very transmissible, and sometimes fatal, virus.
Toilet paper was nowhere to be found, but at least it was cheaper than it is now, along with most
groceries.

In the months to follow, the pandemic recession was largely recognized by global and political leaders as
a severe economic trauma. And the swift and almost miraculous recovery of the U.S. economy has been
the envy of the world.

The one lasting challenge for the U.S. economy that permeates nearly every benchmark of economic
health is inflation. Price increases are finally easing, but not before taking a toll on all Americans, shaping
how they feel about everything.

A new normal has settled into the U.S. economy — one that nobody could have predicted four years
ago. Here’s what it looks like now, in 11 charts.

1. Unemployment

The labor market imploded as layoffs spiked at the beginning of the pandemic, fueling sky-high
unemployment, as many businesses closed or dramatically slowed operations.
In the years that followed, the labor market defied expectations with a vigorous recovery, thanks in
large part to consumers opening up their wallets in different ways. The economy added 275,000 jobs
last month — extending the longest stretch of an unemployment rate below 4 percent since the 1960s.
Still, not all industries have been affected equally. While the health-care industry has steadily grown
over the past four years, to accommodate those who got sick during the pandemic and also the growing
aging population, the tech industry has shed tens of thousands of workers, after overstaffing to
accommodate users flocking online in 2020.

The unemployment rate is expected to climb slightly in 2024 as high interest rates slow business
expansion. But data shows that employers are staying committed to investing in their workforces,
especially as the Federal Reserve is expected to lower rates, which makes business loans cheaper.

2. Wages
Many Americans got large pay increases after the pandemic, when employers were having to one-up
each other to find and keep workers. For a while, those wage gains were wiped out by decade-high
inflation: Workers were getting larger paychecks, but it wasn’t enough to keep up with rising prices.

That’s starting to change, as worker shortages are no longer plaguing employers and the costs of
running a business settle down. Wage growth is outpacing inflation again, which means workers are
back to seeing steady gains in their spending power.

3. Savings

With sudden lockdowns forcing Americans to cancel plans and stay home, families were able to save an
eye-popping 32 percent of their incomes in April 2020, an all-time high.

More savings spikes followed, as government stimulus checks and enhanced unemployment benefits
made their way into bank accounts. But as the world reopened — and people resumed spending on
dining out, travel, concerts and other things that were previously off-limits — savings rates have leveled
off. Americans are also increasingly dip into rainy-day funds to pay more for necessities, including
groceries, housing, education and health care. In fact, Americans are now generally saving less of their
incomes than they were before the pandemic.

4. Credit card debt

As Americans drastically pulled back on spending early in the pandemic, they relied less on loans and
credit cards. A mix of stimulus money and other measures, like a pause on student loan repayments,
helped keep indebtedness low for a while, even as the economy opened back up.

But now, debt loads are swinging higher again as families try to keep up with rising prices. Total
household debt reached a record $17.5 trillion at the end of 2023, according to the Federal Reserve
Bank of New York. And, in a worrisome sign for the economy, delinquency rates on mortgages, car loans
and credit cards are all rising, too.

5. Immigrant visas
When the pandemic hit, the State Department cut back on processing visas except in certain cases, such
as those for emergency and “mission critical” situations, with more limited services starting again in July
2020.

That led to a precipitous drop in the number of immigrant visas approved during the early months of the
pandemic. It took years, but the agency caught up to its previous rate — and said it reduced its overall
backlog by 15 percent last year.

A lack of foreign-born workers in the United States hamstrung employers back in 2021 and 2022. But
their return to the U.S. labor force, due to both legal and illegal immigration, helped propel economic
growth in 2023 beyond expectations.

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6. Groceries

Grocery prices began their ascent early in the pandemic, when supply chain disruptions and labor
shortages collided with a sudden rise in demand, as Americans hunkered down at home.

Since then, a mix of factors, including Russia’s invasion of Ukraine, extreme weather related to climate
change and a massive Avian flu outbreak, have kept costs elevated. Overall, grocery prices are up 25
percent from four years ago.

However, there’s good news: Those increases have started to level off. Rice, milk, meat and fruit have all
gotten cheaper this year. Economists generally expect grocery inflation to keep cooling — which means
prices will stabilize, though in a healthy economy they’re unlikely to drop back down to pre-pandemic
levels.

7. Gas prices

Gas prices dipped during the beginning of the pandemic, as people stayed home and business
operations slowed. But skyrocketing prices hit American’s wallets in 2022 — caused in part by the
Russian invasion of Ukraine.
Prices have eased in recent months, due in part to increased oil production in North America. The
United States is producing more oil than any country ever has.

“The global refining picture continues to improve, providing more capacity and peace of mind that
record-setting prices will stay away from the pump in 2024,” wrote GasBuddy’s head of petroleum
analysis, Patrick De Haan, in an annual fuel price report. Analysts don’t expect major spikes in gas prices
this year, beyond expected seasonal waves.

8. Home prices

The pandemic set off a home-buying frenzy. Americans were stuck at home, hankering for more space
— and had the extra cash to buy their first homes or upgrade to larger ones.

It also helped that rock-bottom interest rates made it cheap to borrow. The result was a stunning 48
percent surge in home prices that lifted the average U.S. sales price to over $552,000.

But lately, demand has cooled, thanks to a mix of high prices and rising borrowing costs, as the Federal
Reserve raised interest rates to curb inflation. That’s helped bring down average home prices by 11
percent from their 2022 peak.

Home builders are catching on that consumers want more affordable houses, driving a shift toward
construction of smaller new homes with lower price tags.

9. New restaurant openings

Many restaurants were forced to close during the pandemic. Others shifted to takeout food and to-go
cocktails but still had to cut staff. When things opened up again, diners rushed into restaurants but the
industry took a while to get back on track, due to labor shortages and rising prices for everything.

Now, optimism has returned. Restaurant openings last year saw a nearly 2 percent bump over 2019,
according to data from Yelp, which tracks restaurant openings by calculating new listings on its site. “In
2024, we expect to see this positive momentum continue,” said Cliff Cate, Yelp’s vice president and
general manager, restaurants. And restaurants aren’t the only new businesses in town: For the first time
since the onset of the pandemic, overall business openings last year in every U.S. state beat out pre-
pandemic numbers, according to Yelp.

10. Air travel

Air travel plummeted during the early months of the pandemic, as people sheltered in place and borders
closed around the world.

It rebounded faster than many expected as passengers exercised their pent-up demand to travel.

But the recovery came with challenges caused by staffing changes and industry shifts. When covid hit,
airlines encouraged some staff to take early retirement or voluntary separation packages, leading to
senior staff departures. That left airlines with less experienced staff, and sometimes a shortage of
workers — issues that have led to delays for travelers and potential safety challenges, according to some
industry leaders.

11. Consumer sentiment

Mass uncertainty early in the pandemic caused consumer sentiment to dip, as measured by the closely
watched survey by the University of Michigan. Another drop in sentiment followed during peak inflation
prices. But consumers are finally feeling better about the economy.

The number has been improving in part because of easing inflation rates. Consumers seem to feel that
inflation will “continue on a favorable trajectory,” Joanne Hsu, an economist at the University of
Michigan and director of its consumer surveys, wrote about the February consumer sentiment numbers.