NEW YORK—A comprehensive report issued this month by the accounting and management services firm KPMG takes a closer look at how the current pandemic has impacted the U.S. and global economic landscape. As the firm notes in its report, “Pandemics of the length and scope of the current COVID-19 pandemic can change the economic and geopolitical landscape, literally shape shifting economies in their wake. Data on the shape of economies after pandemics shows higher savings rates, a smaller labor force, lower real interest rates, higher wages, wealth destruction, and lower capital expenditures.”

In addition the report, “Shape Shifting: How the pandemic is changing the contours of the economy,” finds that in many cases the rate of interest was below the rate of growth after past pandemics. “Some past pandemic economies have also experienced higher inflation rates in the immediate aftermath of the pandemic,” the report noted.

However, no previous pandemic was met with the medical, monetary, and fiscal intervention provided in response to the COVID pandemic, according to KPMG.

The report attempts to map some of the similarities and differences between the current and historic pandemics and the implications for the U.S. and global economy.

In addition to population growth patterns, wages and working remotely, KPMG looks into retirement trends and finds some interesting trends that likely will play out for employers for several more years. As the report notes, “In addition to a falling population, retirement rose during the pandemic.” The implications and trends, according to KPMG, are:

  • Labor force participation among those over the age of 65 was one of the fastest growing cohorts over the past two decades. The pandemic appears to have reversed this.
  • For the approximately 1 million workers below the age of 65 who retired during the pandemic, it is very possible they will return to the labor force if the economic recovery is long and/or strong enough. This would be good news for employers and the outlook for economic growth.

  • For around 2.5 million people over the age of 68 who retired during the pandemic, their return is unlikely. This poses a structural drag on consumption and in turn inflation in the years ahead.