Predictions For 2021 – Part 1
I don’t have a crystal ball, but being well into my 4th decade of helping people navigate the financial world, I like to think I have a good feel for what might be coming down the road.
We all know the pandemic will mitigate and end in the coming months, but what will be left it its wake? And what is the new normal? Let’s discuss some of what we might see and encounter.
As the economy fully reopens and people stop sheltering, there will be changes. Some will be more temporary and some will be permanent.
There will be a surge in demand for services for services that we haven’t been able to utilize at all or fully.
Dine in restaurants that survived will flourish for a time. Good luck getting a reservation, and expect higher prices. Eventually that will mitigate, and people will go back to eating out with the same frequency they did before the pandemic. New restaurants will open taking advantage of the available space, and flood of kitchen equipment and fixtures available on the market.
Travel will be a mixed bag. Leisure travel will surge. Firms in the industry that are set up to take advantage of the leisure traveler will do very well. That will certainly benefit those that were not mortally wounded financially in 2020. This trend should continue for some time. Business travel on the other hand will not likely return to its former self. Much of that middle ground interaction – too much for a phone call but very hard to justify a plane ride, will stay on Zoom and the like. The business travel industry is in for a consolidation at best.
Bricks and Mortar Retail has been in decline for quite some time. The pandemic accelerated this and I don’t think there will be a recovery. We may not continue having our groceries delivered, but we aren’t going back to the mall. Kmart, Sears, and JC Penney are just the tip of the iceberg. Manufacturers are increasingly selling direct on line. Any company without such a strategy has a much more gray future. This bodes well for transportation companies and warehouse real estate. This will also be the death of cash.
Technology will continue its drive into our day to day lives. Telehealth is here to stay for some of our healthcare. It is more efficient and cost effective. Paper documents are dead. Even contracts and other legal/governmental documents are being executed digitally by Docusign and other companies. A notary is not a good career choice.
There are some big headwinds we face. Inflation may be the biggest. The US Government expanded the money supply by Trillions of Dollars. That means more money chasing few goods – a sure recipe for inflation.
The second headwind is the deferral of eviction and foreclosure in both the residential and commercial real estate markets and by extension the mortgage market. There may a wave of foreclosures, defaults and bankruptcies surrounding this that the government will not be able or willing to mitigate. This may have negative implications in certain sectors of the capital, financial and real estate markets.
Tomorrow, Georgia will go to the polls to elect two US Senators. The outcome of that election will determine the control of the Federal Government. In part II, I will share thoughts related to that outcome once the results are known.
The Bottom Line: There are always opportunities if you look hard in the right places
–Michael Ross, CFP®