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How industry leaders can emerge stronger in the US economic recovery

Carina Markel Partner, Capital Markets, Deals Practice, PwC US March 11, 2021

While the health and economic crises resulting from the pandemic have disrupted nearly all aspects of our lives, the US economy is expected to join major global economies for a rebound in 2021. Although new variants of the virus do pose concerns, vaccines have raised prospects for growth. According to the International Monetary Fund’s forecast in January 2021, the US economy is expected to expand by 5.1% — higher than projections for the eurozone at 4.2%, Japan at 3.1% and closely on par with GDP for the world, forecast at 5.5%.

Thanks to our relatively flexible labor force, the economy is in a relatively better position than during the 2008 financial crisis to create jobs (in contrast with the eurozone). Additionally, with strong capital buffers, the US banks are in better financial health than they were in the last crisis. 

Looking ahead at a K-shaped recovery?

Needless to say, the US recovery is likely to be complex and uneven. The nation came into the crisis already suffering from deep social inequalities and vulnerabilities within pockets of financial markets, and these problems persist despite Washington’s stimulus policies aimed at stabilizing the economy. 

One scenario that’s likely to play out is a K-shaped recovery in which certain sectors and households recover faster than others. Already, we’re seeing early signs of this across the economy. Industries such as technology, digital payments, software, pharmaceuticals and life sciences, and healthcare have come away as winners. 

By contrast, government restrictions to contain the virus combined with more cautious consumers worried about their health and safety continue to hamper services-related activity in sectors such as entertainment and media, transportation, travel and hospitality. The market outlook also remains uncertain for sectors like traditional retail and energy.

Here’s how not to fall behind 

The COVID-19 crisis has shifted not only what we buy but how we shop. And it’s disrupted the way we work, meaning industry leaders will need to rethink their prospects for growth and their investment strategies. To emerge stronger from the crisis amid a rapidly evolving business climate, we recommend that you consider several key steps. 

  • Invest in technology. The crisis has accelerated investments in new and emerging technologies across multiple sectors. In a recent PwC survey of US executives, 76% said their companies plan to increase investment in digital transformation in 2021. Companies may have capital to invest, but they will need to carefully evaluate which technologies can keep them competitive and set goals for what they want to achieve — increasing efficiencies, developing new products or expanding into different markets.
  • Invest in your people. Digital transformation doesn’t end with acquiring new technology. To fully leverage a tech investment, you should make sure your workforce has the skills to manage and scale the technology. This involves more than developing existing talent. It also requires creative thinking about recruiting the skills to grow their organizations. With the rise of remote work, companies can attract talent from virtually anywhere, and this means more competition than ever.
  • Invest in your processes. Investments in tech and talent won’t generate the returns you expect unless your company adjusts its processes and operating model, too. Say you plan to modernize your finance department by automating routine transactional processes. This can not only free up your workforce’s time and resources to perform other types of roles, but it can also affect your operating model going forward. 
  • Invest in ESG. Increasingly, investors, consumers and other stakeholders are evaluating performance through a set of environmental, social and governance (ESG) criteria. This includes how you manage relationships with employees, customers and the communities in which you operate. Think beyond shareholder interests and consider broader impacts. Crucially, social aspects are part of the sustainability agenda, and leaders should balance the trade-offs and opportunities that might arise from implementing different components of ESG. 

Indeed, the US economy is rapidly changing. The uncertain changes may discourage some, but those who think long term and focus on stakeholders will likely be able to shape their future — and be better positioned to grow for years to come.

Explore our global series 

Want more insights on the big issues facing business and society in the year ahead? Our global series reveals how six disruptive forces are shaping our world in the year ahead and also serve as a framework to identify opportunities in the next normal. 

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Neil Dhar

Neil Dhar

Vice Chair and Consulting Solutions Co-Leader, PwC US

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J.C. Lapierre

Chief Strategy and Communications Officer, PwC US

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