Curt Long NAFCU - What is the ‘New Normal’ After COVID in Field of Economics?

ARLINGTON, Va.–There’s been no shortage of discussion and debate around all the “new normals” created by the coronavirus pandemic. But what about the field of economics? What kinds of new thinking about economic metrics has the long shutdown of much of the world’s economy meant?

“There are some things I think are still in flux and that haven’t been fully calcified,” said NAFCU’s chief economist,” Curt Long. “I think the biggest one of those is fiscal stimulus. As we look ahead to episodes of economic downturns, the experience during COVID provided a lot of evidence in midst of a real economic crisis that economic stimulus is a very, very powerful tool to support an economy.

“But there are also a lot of side-effects to take to into account. The way inflation shapes up in the next six months may have a lot to say about what do in next crisis and using the level of economic stimulus in the ways we did,” Long continued. “It has potential implications for non-crisis times, as well. The child payments right now seem to be very popular.”

About Inflation

In addition to all the discussion and reporting around various other new normal, inflation has been getting just as much attention, perhaps even more in recent months.

“But does all that discussion of inflation become a self-fulfilling prophecy by contributing to inflation?

“I have had lots of conversations with just friends and family who don’t even have a toe in economic waters,” acknowledged Long. “I do think inflation is working partly through the expectations channel. When consumers and especially businesses expect inflation, it effects their pricing discussions.”

Some of the “chatter” around inflation may contribute to inflation picking up, said Long, but not in any significant way.