The timing and extent of the nation’s and Colorado’s economic recovery from the COVID-19 pandemic will depend on how quickly the virus spreads in the coming months, a Federal Reserve Bank economist said Tuesday.

The state’s and nation’s economies have recovered somewhat from layoffs triggered by measures to slow the spread of the virus, but unemployment remains well above historic lows reached before the pandemic took hold, said Nicholas Sly, assistant vice president, economist and Denver branch executive for the Federal Reserve Bank of Kansas City. Over the longer term, he remains concerned about how willing and able laid-off workers will be to return to work.

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“In the near term, the path of COVID-19 remains the key driver of the (economic outlook),” Sly told bankers and business leaders watching the bank’s Colorado virtual economic forum. “When can the recovery begin in earnest across the broad swath of the economy? When will we have fewer cases and when will consumers have more confidence to spend and travel?”

Sly remains concerned that the longer people are out of work, some may not renew required licenses or certifications and others could lose key workplace skills that will make it more difficult for them to return to work. That will hamper business expansion plans by making recalling or hiring employees more difficult, especially if workers  are reluctant to return to their jobs due to safety concerns related to the pandemic, he said.

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Consumer spending has recovered, plateaued and lost ground in concert with the rate at which the virus has spread — when cases spike, consumers are reluctant to spend on just about anything, Sly said. There are questions to what extent industries such as restaurants and travel continue to recover as virus cases jump in Colorado and  other states and cold weather makes social distancing more difficult, he said.

Even when the Colorado and national economies have recovered, what that recovery looks like will be far different than in the past as a result of changes in how and where employees work and live, Sly said. The structures of entire industries have changed, likely permanently, as a result of the pandemic, including more employees working from home, more virtual meetings and medical appointments and retailers selling more merchandise for pickup or delivery, he said.

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“The long-term question (for the state and national economies) is what does the new normal look like,” Sly said. “We should expect a new normal. The recovery will look different and there are some sectors that will not go back to the way they looked before. How quickly we get to the new normal ultimately will determine the shape of the recovery.”