The "Revenge Economy"... is this the quarter the world returns to "normal"? For a year, sweatpants replaced shopping, screens replaced travel, and microwaves replaced restaurants. Thanks to all this non-spending (plus stimulus checks), Americans have socked away $1.5T in excess savings. Consumer spending tanked in 2020, but it’s expected to spike in the summer and fall. As life slowly returns to semi-normalcy, we're seeing leading indicators of the "revenge spending" economy. Since mid-March, pandemic travel has been notching record highs, with over 1M people passing through TSA check points each day. "Revenge spending" outside the home on things like vacays, concerts, dining, and (non-stretchy) clothes could be coming.
The Bull or Bear Market... Will the bull market continue? The pessimist case: interest rates have risen, the new $1.9T stimulus is sparking inflation fears, and Big Tech is losing its coronaconomy edge. And with the new Dem-controlled government, tech might see more aggressive regulation. Tech stocks carry massive weight, so a move away from them could depress the market. The optimist case: the Fed says it won't raise rates any time soon, the $1.9T stimulus could bring faster economic healing, and more than 25% of Americans have been vaccinated. Also: infrastructure investments could boost cyclical stocks longer-term, lifting the market.
The Future of Labor... The pandemic has exacerbated income inequality — will reopening help narrow the gap? America is waiting for unemployment to snap back to pre-pandemic levels (3.5%), but this'll likely take longer than three months. 2.5M+ women dropped out of the labor force between February 2020 and this January — will they return to work? Wages, unions, and WFH are also top of mind: The Biden admin is trying to raise the federal minimum wage to $15/hour, but it wasn't included in the last stimulus — will we see any federal minimum wage increases? Will there be more major pushes for unionization, like we're seeing now at Amazon? Will companies return to the office, or will a hybrid WFH model become the norm?