As the world ushered in a new year, there was a sense of disappointment that the expected return to “normalcy” was not only a no-show but in many ways signaled a further setback to the business world. 2020 may have been a year to forget, not only because of the onset of the pandemic but because it so dramatically changed the business environment in so many different areas.
Unemployment in the US reached unprecedented levels in 2020 due to the shutdown of so much of the economy. But high unemployment is not in itself a novelty. The US has endured many periods of high unemployment only to emerge even stronger in its aftermath. What did dramatically change was the concept that work need not necessarily be in an office setting but could also be fulfilled at home. Record numbers of people worked from home and large numbers retired early. “It was a time to reflect, to appreciate the family and make dramatic life changes like early retirement,” said one business consultant.
While many business experts tied the new work ethic to the pandemic and the ensuing variants, it is now apparent that the work from home will outlast the global virus. Not only did workers find this new mode enticing but so did employers who still extracted the production they desired at a much lower cost. In Manhattan, for example, many corporations cut back on their space to reflect the many employees who either left or were working from home.
2020 was a year in which the pandemic forced stores and restaurants to shut down for months, and sporting and entertainment events were canceled around the world. But it was also a year where many stores closed permanently and where many chains closed dozens of stores to reflect the new retail climate. They concluded that a good deal of retail was shifting to on-line, that pedestrian traffic was waning, and that customers were looking to conveniences like curbside pickups. Brand names like JCPenney, Neiman Marcus, Stage Stores and others filed for bankruptcy in 2020, and Lord & Taylor liquidated its remaining stores. Macy’s also closed dozens of stores and eliminated thousands of corporate jobs.
But just when some business experts were eulogizing the conventional brick and mortar retail venues, there appeared to be some new life. People were anxious to get out and the summer of 2020 was relatively mild in terms of the pandemic. This led to rosy predictions for a robust holiday season but then the Omicron variant set in slowing or ending what was expected to be a resurgence in retail sales. During the few months that the pandemic seemed to be on the decline and vaccinations by and large being effective, there was every expectation that we would be in a recovery mode by now. So, what happened?
First, inflation that was believed to be dormant and irrelevant to the economy reared its ugly head. Consumers this past year felt the pain of rising inflation at the pump and at the supermarket counter. For the first time in many years $5.00 a gallon became a distinct reality in many markets. It was then that thanks to President Biden’s announcement that the Department of Energy will release of 50 million barrels of oil from the Strategic Petroleum Reserve that the prospect of lower prices for Americans grew, albeit still not to pre-pandemic levels.
The rise in energy prices were enough to set off a chain reaction on many consumer prices. The cost of shipping rose dramatically, and these increases directly affected consumer prices. But if the rising energy costs were not enough, supply chain issues plagued the nation. For example, in addition to the energy prices, labor shortages also affected the cost of shipping. For a good deal of 2021 and continuing even today, there was a shortage of drivers forcing many shipping companies to pay signing incentives and to raise salaries.
If 2020 was like an earthquake for business, the reverberations were reflected in the resignation of some of the leading CEO’s in the IT world, such as Twitter CEO Jack Dorsey, Facebook’s Mark Zuckerberg, and Amazon’s Jeff Bezos. Apparently, they decided that the post-Covid era, when it finally comes should be piloted by a new generation of corporate executives that are in more in tune with a new generation of the consuming public. These leadership changes at some of the IT industry’s leading companies, are efforts to change the direction (and fortunes) of IT companies – and, in some cases, a combination of the two. But the rising threat of ransomware and cyberattacks against businesses, government agencies and IT companies, illustrated by several major cybersecurity incidents throughout 2021, are clearly this year’s biggest – and still developing – news story.
What is clear is that the coming year is full of uncertainty. For one, no one knows just how far the Covid pandemic will continue to go. There are many questions regarding the effectiveness of the vaccine, particularly against new and emerging variants. This uncertainty trickles down to all levels of the business world. Even restaurants, who already experienced extreme turbulence, do not know at what point indoor dining will be restricted which makes planning a virtual impossibly. Multiply the restaurant question marks to all areas of the economy and you can begin to see why there is so much doubt.
The travel industry is another good example of an industry that is in a constant state of flux. Just when it seems that air travel is on its way back comes a new variant like Omicron with many new restrictions. Israel, for example, like many other nations is not as yet fully open even to Jewish travelers.
Business leaders say that despite the continued uncertainty, 2021 was a better year for business than 2020. They fear that it will take many more years until the elusive normalcy finally returns. Some say that people are so upset with the ongoing pandemic that they are willing to return to normal on their own. “I sense that people are tired and looking for activities that help them feel normal,” said one university economic professor. “Sure, people are wearing masks and reluctantly adhering to guidelines and regulations, but that does not minimize their frustrations and anger over the lingering pandemic.”
I couldn’t help but notice an item in a Southern newspaper that offered discounted helicopter rides to people who simply wanted to go aloft “for old time’s sake.” So, while 2020 ended with people accepting the new reality of the pandemic, 2021 ended with people doing everything that they could to get back to “normal.”