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F E A T U R E D
A R T I C L E
On the Post-Pandemic Horizon,
Could That Be … a Boom?


Signs of economic life are picking up, and mounds of cash are waiting to be spent as the virus loosens its grip.

The U.S. economy remains mired in a pandemic winter of shuttered storefronts, high unemployment and sluggish job growth. But on Wall Street and in Washington, attention is shifting to an intriguing if indistinct prospect: a post-Covid boom. 

There are hints that the economy has turned a corner: Retail sales jumped last month as the latest round of government aid began showing up in consumers’ bank accounts. New unemployment claims have declined from early January, though they remain high. Measures of business investment have picked up, a sign of confidence from corporate leaders.

Forecasters have always expected the pandemic to be followed by a period of strong growth as businesses reopen and Americans resume their normal activities. But in recent weeks, economists have begun to talk of something stronger: a supercharged rebound that brings down unemployment, drives up wages and may foster years of stronger growth.
Economists surveyed by the Federal Reserve Bank of Philadelphia this month predicted that U.S. output will increase 4.5 percent this year, which would make it the best year since 1999. Some expect an even stronger bounce: Economists at Goldman Sachs forecast that the economy will grow 6.8 percent this year and that the unemployment rate will drop to 4.1 percent by December, a level that took eight years to achieve after the last recession.

“We’re extremely likely to get a very high growth rate,” said Jan Hatzius, Goldman’s chief economist. “Whether it’s a boom or not, I do think it’s a V-shaped recovery,” he added, referring to a steep drop followed by a sharp rebound.

The growing optimism stems from the confluence of several factors. Coronavirus cases are falling in the United States. The vaccine rollout, though slower than hoped, is gaining steam. And largely because of trillions of dollars in federal help, the economy appears to have made it through last year with less structural damage — in the form of business failures, home foreclosures and personal bankruptcies — than many people feared last spring.
Lastly, consumers are sitting on a trillion-dollar mountain of cash, a result of months of lockdown-induced saving and successive rounds of stimulus payments. That mountain could grow if Congress approves the aid to households that President Biden has proposed.

When the pandemic ends, cash could be unleashed like melting snow in the Rockies: Consumers, released from their cabin fever, compete for hotel rooms and restaurant tables. Businesses compete for employees and supplies to meet the demand. Workers who were sidelined by child care responsibilities or virus fears are drawn back to the labor force by suddenly abundant opportunities. 

Delays in the vaccine rollout could stall the recovery. So could new strains of the virus that render vaccines less effective. A political standoff in Washington could hold up aid for unemployed workers and struggling businesses. And even if the economy avoids all of those traps, there is unlikely to be a single moment when public health officials give an “all clear”; it could be years before people pack into bars and sports stadiums the way they did before the pandemic. 

Many businesses and households that have struggled to stay afloat during the pandemic, but the boom could provide opportunities. Workout Anytime, a chain of 24-hour fitness clubs, was hit hard by the early stages of the pandemic, which shut down gyms nationwide. Business has since rebounded, but not to previous levels, as customers remain wary about working out in close quarters.
But Greg Maurer, a company vice president, sees better times ahead. The pandemic hasn’t dampened people’s enthusiasm for working out, he said — if anything, it has made the importance of physical fitness clearer. As soon as people are sure it’s safe, he said, he expects business to be gangbusters.

“This may be the biggest growth period we’ve ever had coming up,” he said. “There is a huge group of people out there saying, ‘I cannot wait to get back to the club.’”

He expects business to leap ahead of its path before the virus. That’s partly because the pandemic has wiped out many smaller gym chains, leaving less competition. But it is also because the pandemic led Workout Anytime and other chains to adopt digital tools, like online bookings and video workouts, that could open up new revenue streams.

“We are a way better organization today as a result of these challenges than we were a year ago because we had to get better,” Mr. Maurer said.

Stories like his are behind one of the most intriguing possibilities for the post-Covid-19 era: a surge in productivity. Companies and workers have been forced to embrace a wide range of technologies and policies — online meetings, file sharing, flexible work schedules — that could make their operations more efficient. 
Constance L. Hunter, chief economist at the accounting firm KPMG, likened the possibility to the period after World War II. The war led to the development of new technologies and spread existing ones to factories across the country. Those advancements helped make the postwar period one of the best on record for productivity growth, and for economic growth in general.

There is no single definition of a boom, nor a committee of elite economists who agree when one has begun, as there is with recessions. But economists generally agree that booms are characterized by a combination of strong growth and a high absolute level of activity. In recent decades, however, booms have become less common. Growth never took off after the mild recession that hit in 2001, and while the unemployment rate hit a half-century low after the last recession, it took a decade to get there.

There are reasons to think this recovery could be different. For one thing, the economy was fundamentally healthy when the recession began. There was no housing bubble; household debt was low; banks weren’t sitting on a tower of dubious loans that could collapse at any moment. That means there is no reason, at least in theory, that the economy can’t pick up more or less where it left off.

Policymakers have also responded much more aggressively to this crisis than to past ones. The Fed moved quickly to prevent the pandemic from setting off a financial crisis. Congress spent trillions of dollars to make sure unemployed workers could keep their homes and feed their families, and to help small businesses. 

Those efforts were far from a total success. The unemployment system buckled under the crush of applicants, and millions had to wait weeks or months to get benefits, if they got them at all. Government aid was inadequate, or came too late, to save thousands of businesses. State and local governments have slashed jobs. Hunger rates have risen.
But government aid appears to have been largely effective at preventing deep structural damage that could prevent a strong rebound. There has been no wave of foreclosures or corporate bankruptcies. Rates of entrepreneurship have soared, signaling that Americans are optimistic and have access to the capital necessary to act on that optimism.

Even if there is a strong rebound, however, economists warn that not everyone will benefit.

Standard economic statistics like the unemployment rate and gross domestic product could mask persistent challenges facing many families, particularly the Black and Hispanic workers who have borne the brunt of the pandemic’s economic pain. That could lead Congress to pull back on aid when it is still needed.

“The risk is that within the aggregate data that look relatively encouraging, the stories of many, many households are going to get lost,” said David Wilcox, a former Fed economist who is now a senior fellow at the Peterson Institute for International Economics.

Still, for all its shortcomings, a boom may be the best chance many workers have to make up lost ground. The strong labor market that preceded the pandemic was delivering wage gains to low-income workers and giving opportunities to people with disabilities, criminal records and other barriers to employment. A quick drop in the unemployment rate won’t heal all the wounds caused by the pandemic, but it might at least stanch the bleeding.

“Root for the boom,” Ms. Sinclair said. “But don’t count on the boom doing everything for us.”

Title: On the Post-Pandemic Horizon, Could That Be … a Boom?
Source: https://www.nytimes.com/2021/02/21/business/economy/pandemic-economic-boom.html
Author: Ben Casselman
© 2021 The New York Times Company
All rights reserved. 
Should you invest at market highs?
Key Takeaways
  • With stock markets at all-time highs, concerns about an impending crash is a recurring theme that keeps investors with cash on the sideline.
  • History shows investing—even at market peaks— has generated strong positive returns for long-term investors. In short, time is money. Data shows that lump-sum investing is a more efficient approach to building wealth over time. 
  • However, dollar-cost averaging may be a reasonable strategy for investors who might stay out of the market altogether due to fears of a large downturn after investing a lump sum.

Investors have learned the adage of buy low and sell high, but with stock prices at all-time highs, investors with money on the sideline wonder, should they still invest and if so how?

The investing journey comes with ups and downs of a normal market cycle. While there are always risks involved with any investment strategy, having a longer-term perspective provides the greatest safety from market sell offs. A look back at the returns when investing on the peak day before the market turned, shows the chances for positive returns are strong over the long-term, even if one started the investment on the worst possible day1. However, investors bear greater risk for negative returns in the short to intermediate term.

Investors citing potential for near-term negative returns as the reason for holding onto cash are betting the pullback will make up for the lack of return from staying in cash and also that they will be disciplined to put the money in when everyone else is selling during a bear market. Rather than trying to predict the peaks and valleys of market returns, investors should recognize it’s important to stay invested for the long run as markets spend more time rising than falling. In short, time is money.
Source: Ritzholtz Wealth management. S&P 500 returns through 11/30/2020

That leads to the next question for investors with cash to invest; whether it’s better to invest it in a lump sum or space it out over time by investing in regular intervals such as monthly or quarterly using a strategy known as dollar-cost averaging (DCA).

According to JPMorgan, lump-sum investing has been consistently proven to outperform DCA. They compared DCA to lump-sum investing on a rolling one, three- and five-year basis over the past 20 years and found lump-sum investing outperformed DCA over 70% of the time over each rolling year period2. The simple reason for this is that markets go up more than they go down. In fact, 66% of all monthly S&P 500 returns going back to 1990 have been positive allowing lump sum investing to consistently outperform.

So why would investors consider dollar-cost averaging if research shows otherwise? For many investors the thought of putting all their cash in the market at once may seem too stressful and possibly lead many to not invest at all. In short, DCA helps investors remove the emotions from investing.
Source: JPMorgan. S&P 500 total return index from 9/1990 to 9/2020. Rolling returns assumes over the first 10 months, 10 payments of $1,000 are made at the beginning of each month for each rolling period, and grows with the market for the remainder of the period.

When the market sets new highs, it is tempting to delay investing and wait for markets to settle down. For investors this requires knowing when the crash is coming, and to choose a market low for when to invest, a challenging task for any investor. Instead, history shows markets over the long-term go up more than down. For long-term investors, studies show it’s still beneficial to continue investing even at market peaks. Finally, whether you invest a lump sum or spread it out using dollar-cost averaging, it’s best to establish a plan and stick with it.

¹https://awealthofcommonsense.com/2020/12/what-if-you-only-invested-at-market-peaks/
2https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/on-the-minds-of-investors/does-dca-provide-better-returns-than-a-lump-sum-strategy/

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IMPORTANT INFORMATION
This report is for informational purposes only, is not a solicitation, and should not be considered investment, legal or tax advice. The information has been drawn from sources believed to be reliable, but its accuracy is not guaranteed, and is subject to change. Investors seeking more information should contact their financial advisor. Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results.
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101978 | C21-17306 | 02/2021 | EXP 02/28/2022
Spinach Artichoke Dip
INGREDIENTS:

  • 8 oz. cream cheese, well softened
  • 1/4 cup sour cream
  • 1/4 cup mayonnaise
  • 1 garlic clove, minced (1 tsp)
  • 2/3 cup (76g) finely shredded 
  • parmesan cheese
  • 1/2 cup (56g) finely shredded 
  • mozzarella cheese
  • Pepper, to taste
  • 1 (14 oz) can quartered artichoke hearts, can liquid drained, squeeze artichokes to drain excess liquid, chopped
  • 6 oz. frozen spinach, thawed, squeezed to drain excess liquid

SERVINGS: 8

TIME: 30 Minutes

INSTRUCTIONS:
  1. Preheat oven to 350 degrees. Spray a small (1 quart) baking dish with non-stick cooking spray.
  2. In a mixing bowl stir together cream cheese, sour cream, mayonnaise, garlic, parmesan, 
  3. mozzarella and pepper.
  4. Stir in artichokes and spinach.
  5. Spread mixture evenly into prepared baking dish. Bake in preheated oven until heated through and melty, about 20 minutes.
  6. Serve warm with tortilla chips, crackers or toasted baguette slices
Sources: https://www.cookingclassy.com/spinach-artichoke-dip/ Produceforkids.com
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Source: http://www.printmysudoku.com
Householder Group Estate and Retirement Specialists LLC. advisors are Registered Representatives with and securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Householder Group Estate and Retirement Specialists LLC., a Registered Investment Advisor and separate entity from LPL Financial.