Businesses with advanced technology will be the winners during the coming post-pandemic economic recovery, economist Mike Knetter said.
Knetter also told a Milwaukee Rotary Club virtual event markets will likely see a strong recovery during the first half of the year, with a tougher second half. Real GDP, wages, interest rates and inflation will increase as the dollar remains stable. He expects the markets to recover to around the same levels by the end of the year.
Businesses using technology to advance their market positions will be the winners during that recovery, with larger business fairing better overall, said Knetter, the president and CEO of the UW Foundation.
Areas that experienced many small business closures won’t be able to keep up with post-pandemic demand, he predicted, using restaurants as an example.
“When people are able to go back out again, they may not have the same number of choices they had before,” Knetter explained. “And that will drive up prices at the places that they can go to.”
He added he wouldn’t be surprised to see inflation close the year above 2 percent.
“[The] pandemic has definitely widened the gulf between haves and have-nots,” he said. “But, as noted, it’s going to boost economic growth, in a way, by driving these productivity innovations. We’ve never had this much innovation this quickly in our economy across so many sectors.”
Rural and suburban real estate markets will also see growth as people look to leave crowded cities in the wake of the airborne pandemic, Knetter said.
“Urban real estate is probably going to suffer,” he added.
Smaller, four-year colleges and universities will also likely struggle as the year goes on because virtual learning improvements will “chip away” at that market, significantly, Knetter predicted.
“Many of them were vulnerable pre-pandemic,” he said. “I think it’s going to get a lot tougher for them, and if the pandemic accelerated progress in distribution of education remotely, that will chip away at that part of the market I think pretty significantly.”