![]() ![]() We need not look beyond Oregon to see global issues coming to the fore. Technology-based innovations and solutions to international questions can scale growth rapidly and profitably. Aging populations, national and personal security, water, energy, healthcare, and economic stability are global concerns. Consumers have experienced the negative effects of manufacturing systems and supply chain disruption over this last year. Systems must work with resiliency to unforeseen events. Digital economies enhance worldwide commerce and have the capacity to cross over borders for better or worse. This pandemic has highlighted the global connections. We are all in this together, quite literally. public debt has ballooned beyond 100% debt-to-GDP (Chart 2).Ĭhart 2: U.S. The inflection has occurred at a time when U.S. Bitcoin's dual utility significantly broadens its appeal. Now, Bitcoin, specifically, is rapidly taking on the potential to be an alternative store of value. They have been evolving as an alternative payment system. One example of increasing value in digital are cryptocurrencies. Just as the evolution of the Internet had stages toward widespread deployment, 2021 is witnessing the increasing requirement for digital capacity for survival. The economic recovery underway is defined by unprecedented federal relief, corporations with digital competitive advantages gaining market share at increasingly profitable margins, and the potential for private cost-effective solutions to public challenges. The chaos, uncertainty, disruption, and pain due to the pandemic in 2020 has given way to a transformative path toward economic recovery. Theme #2: Economies Must Evolve to Thrive ![]() Longer-term, we would expect interest rates to move upward with the risk of more inflation as the unemployment rate declines and the economy recovers.Ĭhart 1: Real Potential Gross Domestic Product The current labor surplus will tend to dampen inflation with low interest rates over the near-term. GDP growth, close to potential growth (Chart 1). We think the most likely scenario for the remainder of this decade is slow, approximate 2% real U.S. That said, the increasing public debt will tend to have a dampening effect on future economic growth and the strength of the United States balance sheet. The cost of monetary relief to support negatively- affected Americans is high in the short term but would be potentially even more costly in the future. Finally, 2020 tested the will of the citizens and leaders of the United States to ensure the survival of the very foundations of democracy.Ģ021 begins with a vaccine roll-out, better-than-expected earnings from corporate America, and a tug-of-war on how much is enough financial relief to bridge the pandemic-induced economic divide. It tested the economic fortitude of countries and companies, as well as the flexibility of leadership. ![]() The events of 2020 tested humanity's ability to address a global health crisis. sovereign balance sheet due to federal relief packages will linger. While not purely a "Goldilocks" economy primarily due to potential government policy, it is also not an unstable economy (we do not see a systemic bubble currently building).īelow, we expand upon three themes that we view as most relevant to how 2021 unfolds for the financial markets. We believe the slow, productivity-enhanced recovery has the potential to drive corporate earnings higher than expected with limited inflationary impact. Financial markets have started 2021 at levels that might be considered as good as possible. The financial markets recovered spectacularly after the significant drawdown in the first quarter of 2020. Leadership matters in this challenging economic cycle, as difficult decisions with far-reaching consequences will either support or undermine progress. This event has led to a significant number of over-encumbered government balance sheets that were already less-than-solid. Human health and well-being, technological capability as a core competency, and sustainable solutions to global concerns drive and define this latest economic cycle with new winners and losers.Ī global pandemic dismantled traditional ways of consuming and doing business. The global economy is in recovery, and a new economic cycle is underway. ![]()
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