Curing the Pandemic Hangover

PUBLISHED FEBRUARY 2025

Five years after the word “COVID” panicked the planet, the immediate threat has largely subsided, some painful public-health lessons have been learned, a considerable amount of public trust must be reclaimed, and in some cases, key business sectors are still struggling to regain the footing they had as 2020 dawned.

The impact of the pandemic was both broad and deep: thousands of small businesses in the U.S. went under for good. Millions of people suffered short-term unemployment, many never returning to work. Children locked out of their classrooms experienced a steep decline in academic performance. An existing drop-off in the commercial realty markets for office and retail space worsened even further. Global supply chains came apart by the links, some manufacturing ground to a halt, and employers rewrote the book on workplace scheduling.

For starters.

The pandemic did indeed live up to early predictions that it would be unprecedented—at least in our lifetimes—and in more than a few ways, it proved transformative. The thing is, not all of that transformation was negative. 

Drawing on years of business research Ingram’s compiles and updates annually, one can actually see the way various sectors have buckled and regrouped in the years since “lockdown” became part of the national conversation. But if the numbers show anything, they show that life and commerce found a way to recover. In most cases.

A sampling of trendlines from some of the key sectors in this region shows some signs of encouragement and some for continuing concern. The positive:

• Manufacturing, which shed nearly 24,000 jobs in Missouri and Kansas during the opening salvo of the pandemic, has seen employment rebound 7.4 percent since the 2020 lows and now stands 3.01 percent above pre-pandemic levels.

• The biggest hospitals and medical centers—after sounding alarms over revenue losses in the spring of 2020—actually increased revenues for that year by a combined $1.5 billion. Then they blew the lid off, up nearly 40 percent in five years, from $43.3 billion to nearly $60.5 billion.

• Sunniest of all was the construction sector, including engineering firms with major construction operations. It took a short-term hit at COVID’s onset but roared back. Among the 25 largest firms, billings shot up nearly 55 percent in that five-year span, and employment was up nearly 42 percent.

It was not, however, all wine and roses. 

• College campus enrollments—covering public and private four-year universities and community colleges in both states—are down nearly 7.3 percent. In aggregate, those institutions have seen enrollments drop by more than 40,000 students, a harbinger of hiring challenges to come for employers. 

• Average composite ACT scores, a key measure by which school districts measure college preparedness, fell from 21.2 in Kansas in 2019 to 19.3 in 2024; Missouri’s fell a full percentage point, from 20.8 in 2019 to 19.8 last year.

• The commercial realty sector saw a further bisection between industrial/multifamily and the office/retail worlds. More than a decade of explosive growth in the former helped offset losses in the latter, allowing the sector to record a 6.6 percent increase in space managed—not much more than 1.2 percentage points a year. The flip side there came with gross dollar volumes up 44.4 percent. Caveat: Only about half of the Top 25 firms publicly report those figures, so the market-wide metric could be considerably lower.

So … What’s Changed?

That’s an Eye-of-the-Beholder Question. Winners and losers emerge as you look at the trees; the forest presents a different perspective.

“Society only undertakes these highly momentous transitions every 30, 40 or 50 years,” says Battmer. “COVID was one of those. You could argue that 9-11 and the infancy of the Internet was one, and before that, the Vietnam protest/civil-rights era, and before that, World War II. These only come around so often and can really shift the economy and the axis of things.”

KC Mathews, chief investment officer for Commerce Bank, crunches mountains of data from around the country and the planet in search of insights that could prove useful to investors. His macro view of the past five years?

“I really don’t think that much has changed,” he says. “Start with components of GDP. Think about it: about 68 percent of that is consumer spending, and that share hasn’t changed. It might ebb and flow like in 2020 when large parts of the economy were shut down, but Amazon and the golf courses were open, consumption drove a lot of growth, and today, still, 68 percent of economic activity comes from consumers.”

Roughly 20 percent of GDP is government spending at all levels—and even the new president’s DOGE watchdogs are (for now) tinkering around the margins within a $4.7 trillion budget. They’ll have to do a lot more heavy lifting to nudge that 20 percent figure down. 

Housing, too, Mathews noted, is about 4 percent of GDP. Between those two sectors, he said, “There will be some ebb and flow every year, but in general, the more things change, the more they stay the same.”

While he didn’t cite health care specifically, the trends there have been significant. It accounted for 17.7 percent of GDP in 2019, popped in a big way in Pandemic Year One to 19.5 percent, then stepped down in 2021 (18.3 percent) and 2022 (17.3 percent) before reverting to near the pre-pandemic norm at 17.6 percent in 2023. 

That figure, however, belies the huge transformation going on within the sector. Hospital admissions overall are down from 36.5 million pre-pandemic to 34.4 million nationwide last year. But outpatient visits and procedures—enhanced as telehealth went viral drove revenues up sharply. 

Among the 25 largest hospitals in the Kansas City market, admissions fell nearly 6.9 percent over the five-year period, but outpatient numbers shot up 37.5 percent, surpassing more than 8.4 million overall in a metro area of 2.66 million. 

Take all of that down to impacts on individuals, especially the investor class, and the message left by the pandemic is indelible, says Jamie Battmer of wealth management powerhouse Creative Planning.

“For us as a firm, it really reinforced the belief that you are rewarded more for being an owner vs. being a borrower,” he said. “If you own homes, stocks, rental property—all of those have done very well. Those who lend haven’t done quite as well, and those who borrow suffer dramatically. There’s definitely a chasm based on social demographics, and the pandemic created greater disparities. Housing, for example, where you can’t start down that path as easily today.”

What Lies Ahead

The lasting impact of the pandemic? Mathews points to various trends that were already in place before most anyone had ever heard of Wuhan, from commercial real estate to consumer shopping preference shifting to online.

But the consequences of policies adopted that try to curb what has proven curbable will be with us for a long time. Between the Trump I and Biden administrations, the federal government went into the hole by the equivalent of an entire year’s spending—$4.6 billion—with COVID-response programs. 

That rapid infusion of cash in the economy in 2020 and 2021 triggered the great inflation spike of 2022. Prices of every major necessity rose—most notably for housing, cars, groceries, insurance and energy. Even though 2024 saw a concerted effort by the Fed to help keep inflation in check, a 20-percent increase in the cost of living since 2019 prompted many consumers to vent their displeasure in November’s presidential election.

Rising incomes have addressed much of inflation’s pain, but not across all income groups. 

“Bacon prices are up a lot, but the average worker’s ability to buy bacon has gone up,” Battmer says. For others, “When food costs are up, all bets are off. Almost all revolutions are born out of people not being able to feed their families. If I can’t feed my three kids, I’ll climb over carcasses to make it happen. It really hits people in the face.”

Mathews holds out hope that seismic disruptions throughout the nation’s history will be matched by the impact of the pandemic. How? Through the kinds of innovation that businesses are driven to adopt, with rapid recent advances in artificial intelligence leading the way.

As a nation, Battmer says, “For the last 150 years, we have been at the pinnacle of economic innovation. Once, it was steel and manufacturing automobiles. But if things eventually are done efficiently elsewhere, our work goes in new directions, like tech, and that puts us in an enviable spot. There are always winners and losers as innovation presents itself, but since the dawn of time, tech innovation has improved the overall well-being of humans.”

Mathews views some aspects of the pandemic as inflection points and says investors shouldn’t be afraid to assess the possibilities.

“The Industrial Revolution increased productivity,” he says. “The automobile increased productivity. Electronic communication increased productivity. Computers and software increased productivity. Cell phones increased productivity.” 

In the final analysis, Mathews says, “I come back to the data, and you can make an argument that on a national macro basis, things haven’t changed all that much. With Trump, we do know what happened: GDP growth in 2017 was 2.5 percent, then 3, then 2.5 again, then 2020 happened. Look at the last two years: 2.5 percent in 2022, then 2.9 in 2023, even with all this bad stuff of high prices and inflation—2.9!

“Then 2.8 percent last year,” Mathews said. “So yeah, sometimes you really can’t see the forest for the trees. It’s not been all bad.”