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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
