The Green Shoots of 2020

On Your Doorstep

Working from Home

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Needing a Neurologist in Tulsa

Appearing on 60 Minutes, Fed Chair Ben Bernanke said the recession’s end was in sight because the Fed’s asset purchases were generating “green shoots.” They turned out to be slow-growing shoots. The US unemployment rate kept getting worse for seven more months (peaking in October), and needed five more years to get where it was when that recession began.

Similarly, you can look around today’s economy and see green shoots here and there. As bad as things are—and make no mistake, they’re bad—we’ve regained some lost ground since the March/April depths. But the problem is in the “here and there” part. Some parts of the economy are literally booming even as others are in a deep, dark depression.

That’s kind of where we are. If you are in the right spot, you see whole forests of green shoots. You might think they are growing everywhere. And in due course maybe they will, but for now, a significant number of people just have dirt.

Last June in A Recession Like No Other I described this recession’s disproportionately hard hit on the service sector. Most lost jobs came from industries built on personal contact, like restaurants and hotels. The outlook for those sectors remains grim. Sadly, the industry is overrepresented in the lower income brackets. But at the same time, some industries aren’t just surviving; they are thriving.

I want us to notice this because it’s important. The economy is dynamic. It is constantly moving in all directions. We once talked about “cyclical” stocks that outperform when the economy is expanding, and “non-cyclical” stocks that take the lead in recessions. Now the virus has redefined what the “cycle” looks like, so we have a new set of non-cyclical players. My last few letters were generally negative. Today I want to discuss why the economy will recover, how that will happen and what it will look like. It won’t look like 2019, but the recovery will have its own flavor as we fast-forward future industries. I think that’s a good thing.