This is an excerpt from our most recent Economic Outlook report. To access the full PDF, please click here.
Usually, U.S. recessions leave lasting scars on the U.S. economy with unemployment levels rising and remaining at elevated levels and taking many years to recover. The labor force loses skills and thereby we lose productivity. This is usually because the underlying cause of the recession is a systematic issue.
This time appears to be different (yes, we are aware those words are scratched from the Economic vernacular). In fact, due to the idiosyncratic nature of this recession’s cause — being a health issue — the recovery process appears to be rather accelerated. That is, once the U.S. economy has opened up again, most industries appear to have landed on their feet (albeit some more shaky than others).
However, could it be that the pandemic was a catalyst and accelerator for developments that were underway even before the recession? That is, the slow decline of the brick-and-mortar industry. The transition towards more-and-more meetings taking place virtually. Consumers wanting everything and anything delivered to their front door, rather than spending hours shopping items.
In fact, could it be true that the old aphorism “What doesn’t kill you makes you stronger” by 19th century philosopher Friedrich Nietzsche applies? While Nietzsche’s fellows of the 19th century had no shortage of life-threatening diseases, we have been (until recently) spared by these type of scarring attacks on our health.
While the current pandemic has taken many lives and affected many with long-term implications, the U.S. economy has shown (so far) a resiliency and ability to adapt fairly quickly to the unforeseen impact of a complete shutdown of social activity. Indeed, many businesses without direct consumer interaction have shifted to a “work-from-home” environment and restaurants and other close-contact industries have found ways to continue operations in the new environment. It might even be the case, that our economy might come out of this stronger than before.
One of the reasons we expect to come out fairly strong is the health of balance sheets across the board. While the 2009-10 financial recession for instance left many companies struggling for liquidity, this time around, monetary and fiscal policy has bolstered balance sheets and maintained a steady inflow of new funds into the system leaving many companies ready to make investments.
This also benefited households who have witnessed a large increase in savings. These savings are ready to be deployed and will allow for spending splurges for consumers, satisfying their pent-up demand that has built up over the last few months.
“Necessity is the mother of invention.” The technology to allow workers to conveniently “work-from-home” was available for many years now. But the pandemic forced businesses to use these tools, basically overnight. While not all aspects of the U.S. economy and work life can be replaced that easily, Zacks economists expect that this will provide productivity increases.
Particularly, as it will allow to managers to carefully choose which type of activities require a daily commute to an office and which can be easily done without, thereby eliminating unnecessary costs for office space but also unnecessary time spent commuting.
This development is not necessarily new. Many times, in the in the history of the global economy have worldwide events with massive impacts on our lives been the catalyst for technological advancements. For instance, Europe’s experience with the bubonic plague was a contributing factor to the beginning of the industrial revolution, due to the shortage of potential workers.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
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Will the U.S. Economy Be Stronger Than Before the Pandemic?
This is an excerpt from our most recent Economic Outlook report. To access the full PDF, please click here.
Usually, U.S. recessions leave lasting scars on the U.S. economy with unemployment levels rising and remaining at elevated levels and taking many years to recover. The labor force loses skills and thereby we lose productivity. This is usually because the underlying cause of the recession is a systematic issue.
This time appears to be different (yes, we are aware those words are scratched from the Economic vernacular). In fact, due to the idiosyncratic nature of this recession’s cause — being a health issue — the recovery process appears to be rather accelerated. That is, once the U.S. economy has opened up again, most industries appear to have landed on their feet (albeit some more shaky than others).
However, could it be that the pandemic was a catalyst and accelerator for developments that were underway even before the recession? That is, the slow decline of the brick-and-mortar industry. The transition towards more-and-more meetings taking place virtually. Consumers wanting everything and anything delivered to their front door, rather than spending hours shopping items.
In fact, could it be true that the old aphorism “What doesn’t kill you makes you stronger” by 19th century philosopher Friedrich Nietzsche applies? While Nietzsche’s fellows of the 19th century had no shortage of life-threatening diseases, we have been (until recently) spared by these type of scarring attacks on our health.
While the current pandemic has taken many lives and affected many with long-term implications, the U.S. economy has shown (so far) a resiliency and ability to adapt fairly quickly to the unforeseen impact of a complete shutdown of social activity. Indeed, many businesses without direct consumer interaction have shifted to a “work-from-home” environment and restaurants and other close-contact industries have found ways to continue operations in the new environment. It might even be the case, that our economy might come out of this stronger than before.
One of the reasons we expect to come out fairly strong is the health of balance sheets across the board. While the 2009-10 financial recession for instance left many companies struggling for liquidity, this time around, monetary and fiscal policy has bolstered balance sheets and maintained a steady inflow of new funds into the system leaving many companies ready to make investments.
This also benefited households who have witnessed a large increase in savings. These savings are ready to be deployed and will allow for spending splurges for consumers, satisfying their pent-up demand that has built up over the last few months.
“Necessity is the mother of invention.” The technology to allow workers to conveniently “work-from-home” was available for many years now. But the pandemic forced businesses to use these tools, basically overnight. While not all aspects of the U.S. economy and work life can be replaced that easily, Zacks economists expect that this will provide productivity increases.
Particularly, as it will allow to managers to carefully choose which type of activities require a daily commute to an office and which can be easily done without, thereby eliminating unnecessary costs for office space but also unnecessary time spent commuting.
This development is not necessarily new. Many times, in the in the history of the global economy have worldwide events with massive impacts on our lives been the catalyst for technological advancements. For instance, Europe’s experience with the bubonic plague was a contributing factor to the beginning of the industrial revolution, due to the shortage of potential workers.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>