The economy is booming and everyone should enjoy it. The American economy is benefitting from tremendous amounts of pent-up demand and in some of the hardest-hit industries’ activity is beginning to tick back up above 2019 levels. Along with that boom, there are clear signs of inflation and concerns about overheating. Even Janet Yellen seemed concerned for a few hours last week.
Covid cases are dropping, vaccines are being administered and warmer weather is coming. Fatigued consumers are ready to return to normal. We especially miss traveling.
The Year in Review: 2020 was an unprecedented year and The Transcript covered the economy throughout all of its twists and turns. Even though China was battling Covid in 2019, no one really knew what was in store for all of us in 2020. Technology, capital markets, and housing were three industries that boomed. While the stimulus was integral, the economic hero of 2020 was the US consumer. Optimism is high that 2021 will be a more normal year.
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Succinct Summary: It was hard to pay attention to anything other than politics last week, but we’re trying our best to keep a focus on the economy. Economic activity appears robust from the earnings reports that we’re reading. Even the hardest-hit industries appear to be performing much better than expected. The tech industries that surged may be normalizing though. We’re getting a strong new surge in Covid cases, but people seem to feel more prepared than they did last spring.
Editor’s Request: This weekly newsletter is made possible by donations from our readers. If you like what you are reading, click here to donate (Our suggested donation: $10 per month). Help us keep The Transcript going.
Succinct Summary: There were a lot of major data points about the economy last week but the biggest news of all seemed to be just how well tech companies did despite the massive economic dislocation. In a quarter where GDP fell at a 33% annualized rate, Apple managed to grow revenue by 11%! Stimulus probably played some role in tech companies’ strong performance, but beyond the stimulus is the fact that COVID has pushed everyone to spend even more time at home and on the internet. The behavioral shifts appear to be long-lasting too. 20 years after the dot com bubble, the internet is still not done reshaping society.
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Succinct Summary: The economy has had a strong rebound, but the rising virus cases in some states are a cause for worry. Consumers are fatigued from the virus but starting to accept that it may take a while for things to get back to normal. And the old normal may never return. Technology companies have been major beneficiaries of quarantine. Companies are “splurging” on tech.
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Succinct Summary: Companies are assessing the impact of the Coronavirus and the outlook so far is not good. There is real worry that the slowdown in China could result in a global slowdown.
Succinct Summary: The consumer is strong but manufacturing is weak. Everyone is tired of Brexit and tech IPOs probably still have a path to market as long as they have a path to profitability.