Last week in the New York Times Ben Casselman wrote an article speculating about a post-COVID boom. He brought up many salient points, including comparing this time to post WWII growth when technological advances propelled the US economy forward. Businesses during this pandemic had to pivot/adapt in order to survive, and a whole new set of best-practices are now in place making them more efficient. Casselman also mentions that Americans have not been spending and are collectively sitting on $1T in cash built up from stimulus money and not paying for things like dining out or childcare. Restrictions are getting lifted, state-by-state, and the expectation is there’s huge pent up demand for people to go out and spend.
That anticipated buying pressure is forecast to accelerate a virtuous cycle of job growth and increasing wages, as limited supply meets higher demand. This all sounds great for the economy in general (rising tide lifts all boats, etc.)… but what isn’t mentioned, except by readers in the NYT’s comments section, is that habits have changed. Anybody who studies business/marketing knows how important developing habits are and once there’s a fundamental shift, things may never return to the way they once were. Plus Americans are having renewed appreciation on the importance of slowing down and enjoying quieter moments at home. What Casselman also didn’t mention is the impact of nouveau stock market investors who learned how to “play the game” through social media and trading apps like Robinhood; some of that collective $1T is now in active investment progress. The 13 million millennials and Gen Zers who use the Robinhood app have access to granular detailed returns (in real-time), and these amateur investors are starting to realize this could be a viable way to supplement income and save for retirement down the road.
It’s not just businesses that have had to shift to stay afloat, but all Americans are now required to be extra mindful of savings to make sure they’ll have enough to make the monthly nut. Will we go back to restaurants, see live sports and head out on vacations? Absolutely. But in a much more cost-conscious way. The pandemic has forced everyone to become fiscally responsible, which is a good thing.
“What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience?” — Adam Smith