It’s not the COVID economy, it’s just the economy now

Why it matters: The Fed chair's comments are a big deal, marking the end of an era — but they don't mean COVID is gone. Instead, the shocks of the pandemic have reshaped the very fabric of the economy itself.

Zoom in: Powell was explaining why the FOMC dropped the term "public health" from the risk factors listed in its post-meeting statement this week.

• COVID is still out there, it's worth emphasizing. People are dying from the disease every day, and getting sick. Something Powell understands personally, he said. (He tested positive, with mild symptoms, in January.)
• But "people are handling it better, and the economy and the society are handling it better now," he said. It doesn’t really need to be in "a post-meeting statement, as an ongoing economic risk — as opposed to, you know, a health issue.”

The big picture: Some parts of our altered post-COVID economy are shifts that were already underway, and were accelerated by the pandemic. Others are new.

The labor market: In the U.S. we've gone from a labor market of plenty to one of scarcity. A half-million workers died, many retired earlier than expected, and immigration fell. The workforce itself is still short on workers.

• The labor force grew by an average of 1% a year in the postwar period, up till COVID, said RSM's chief economist Joe Brusuelas in a note late last year. Now growth has settled below 0.5%.
• That means higher wages and a landscape where workers have at least a smidge more power than before. It also means a stronger push toward automation wherever employers can do it — more fast-food ordering kiosks and drugstore self-checkouts.

Work itself: Office workers don't always work in offices anymore. The shift to hybrid work isn't just about folks sitting at home in their sweatpants. It's leading to huge changes in cities — all those half-empty offices, the restaurants that no longer feed hordes of desk jockeys.

• People working remotely want bigger homes; and more amenities in regions that didn't need them before. That has meant big changes in the real estate market.

Interest rates: Since the end of the Great Recession, we've basically lived in a zero-interest rate policy (or ZIRP) world. But high inflation, spurred by the supply shocks of the pandemic, pushed central bankers to raise rates.

• In plain English, money isn't so cheap anymore — and it looks to stay that way for a while.
• That means a higher cost of doing business — already we're seeing that ripple through the tech sector, which is looking a lot less frothy and perk-laden.

Reshoring/friend-shoring: The pandemic's supply shocks, and increasing tensions with China, are pushing some companies to move manufacturing closer to home or at least toward "friendly" nations.

• Meanwhile, policy efforts like the $280 billion Chips and Science Act of 2022 are part of a renewed focus on the issue.
• "Globalization, as we have known it, is ending," Brusuelas wrote. “The hyper-globalization that has dominated the global economy over the past 30 years is giving way to an era of regionalization that is radically altering the flow of trade, investment and technology.”

The bottom line: The shocks of the past few years have changed so many people's lives — there's been so much loss — it would be weird if the economy didn't change, too.

• Powell's comments show we’re no longer living in the thick of the “COVID economy” — it's just the economy now.

What's next: Axios' Felix Salmon wrote a whole book about this, it's out May 9.