The Covid-19 pandemic has caused drastic changes to the way we live and work, and the economic consequences could ripple for years to come.

As of early April, the pandemic has killed more than 980,000 Americans. But that figure may not tell the whole story. Not only were deaths higher, but there was also a significant drop in births. Recent analysis by the University of New Hampshire shows that the number of deaths in the U.S. soared between July 2020 and July 2021, when 3.4 million Americans died. That was a record high, and an increase of 20% compared to the same period two years prior.

Another worrying trend identified in the UNH analysis is that there were fewer babies born during that same time period than at any time since 1979. The result? An 84% decline in the number of U.S. births versus deaths, leaving only a 148,000 surplus, compared to 923,000 before the pandemic.

“This is the most deaths in [U.S.] history,” says Kenneth Johnson, a professor of sociology and senior demographer at the University of New Hampshire’s Carsey School of Public Policy. With immigration added to the mix, the U.S. population grew by only 393,000, which Johnson says is the lowest rate of population increase in U.S. history.

That may have a lasting economic impact. In the near-term, the pandemic effectively shrunk U.S. working population. Long-term, economic growth could slow or stall, and funding for critical social programs, like Social Security and Medicare, could also dwindle.

That tees up an important question: What effect will this have on the economy going forward?

‘A big difference from other pandemics’

Johnson says that there is “no clear answer” as to whether the combination of Covid-19, low birth rates and low immigration are a short-term phenomenon. He says it’s likely that “deaths will remain high even if Covid ends because of the large Baby Boom cohorts that are now at a high mortality risk due to their age.”

But the important caveat to take into consideration is that the vast majority of deaths caused by the pandemic were among the elderly. Those are people who, by and large, were likely already out of the working population, and who were already drawing Social Security and Medicare benefits — a fact that may cushion the economic blow, says Sanjay R. Singh, an assistant professor of economics at the University of California, Davis.

“This pandemic hasn’t necessarily hit the labor force as others have, ” says Singh, who co-authored a working paper analyzing the long-term economic effects of pandemics in 2020. “The casualties have been in the older population, which is a big difference from other pandemics.”

Singh’s paper looked at pandemics dating back to the 1300s, including the Black Death, and found that pandemics typically decimate working populations, leading to labor shortages. Unlike wars, which are the only other worldwide events as deadly as disease outbreaks, pandemics don’t destroy physical capital like buildings and equipment.

“Our understanding from the historical data is that if a lot of people die, especially working-aged people, you’re decimating a big chunk of the labor force in the economy. So, there is excess capital compared to labor,” Singh says. As a result, “investment in capital will fall, and the price of labor goes up.”

In short, wages generally spike, and investments of other types fall, which can lead to lower overall returns for investors.

But again, the Covid pandemic is different in that the working-age population was not hollowed out. Instead, the labor market has been shocked by a variety of factors, leading to wage growth. This could mean, Singh says, that already-strained social programs like Social Security may not be as affected in the future. As such, the U.S. may be able to avoid some of the economic effects of a shrinking population, seen in countries like Japan and Latvia.

Still, we don’t know for sure what will happen, Singh says, as there will be “a lot of off-setting effects” in the coming years. “We’ll have to wait and see what happens,” he says.

Preparing for a post-pandemic economy

Because it’s difficult, if not impossible, to predict what the ultimate economic fallout from the pandemic could be, the best thing most Americans can do to financially prepare for a potential economic disruption is to stick to their existing plans, and to some smart financial basics, says Jay Zigmont, a Mississippi-based certified financial planner.

“We can debate if tough times financially are coming, or if they’re already here” in terms of the pandemic, Zigmont says. “With inflation and rising interest rates, we are getting squeezed both by the cost of goods and the price of debt. If you have credit card debt, your interest rate is already going up,” he says.

The best course of action, for most people, is to simply forge ahead — stick to a budget, pay off your debt and set some financial goals or milestones. But keep in mind that since it’s unclear what the future holds, many people who plan on retiring decades in the future may need to sock away more than previous generations did to account for slow potential economic growth in the wake of the pandemic, which may affect market returns.

Doing so would be in line with what was seen in previous generations that lived through pandemics or other serious economic disruptions, says Singh. People who lived through the Great Depression, for example, “had a scarring effect in terms of their saving behavior — people who lived through a big episode have very different behavioral responses over the course of their lives in terms of the economic decisions they make.”

That means that young people living through the pandemic and the subsequent economic fallout may carry it with them for the rest of their lives and potentially end up saving and investing more, or at least living more frugally.

Over time, Singh says, “the pandemic is definitely going to alter behavior and the decisions that people make.”

This article originally appeared on Policygenius.com and was syndicated by MediaFeed.org.