The Post-Covid Economy and Innovation Trends
In this post-Covid-19 world, there are clear industry winners and losers. Industries that depended on mobility didn’t fare so well with stay-at-home orders in place, while industries that pivoted to or had an existing strong digital presence actually thrived. Which industries are poised for a comeback as vaccines become more accessible?
Winners and Losers of Covid
Obviously with travel at a standstill due to the pandemic, airlines suffered. The restaurant and hotel industries saw a huge drop off in activity as well. Meanwhile, innovations in the healthcare and technology sectors boomed. From fitness to automotive, retailers who took advantage of the online space experienced business growth.
However, Covid brought disruption to physical retailers who suffered from the lack of foot traffic to their stores - and many are still trying to catch up. Energy has been disrupted also: As the world continues to move more toward renewable sources of energy, we expect some disruptions to more traditional carbon-emitting energy sources.
And because many changed their lifestyle to accommodate working from home, it may cause changes to the way we work and live in the future and create different dynamics. People may be able to choose where they want to live while working remotely. Many spent the pandemic working on home renovation projects and that certainly helped the home construction and real estate sectors. Delivery services exploded during Covid and we may see more of that instead of choosing to go to a store to get what we need.
What innovation can we expect?
As more populations have access to a Covid vaccine, we anticipate that the travel and hospitality industries will pick back up by the end this year or early next. Similarly, we expect that there will be a slight drop in the excitement surrounding online sectors but there will be a few areas we anticipate continued growth. In healthcare, for example, home monitoring devices are gaining traction and telehealth services have accelerated.
However, not all services have an online counterpart and not all experiences can be digitized, so how does the future look for those industries? We can look at air travel as an example: In China, air travel has bounced back to pre-Covid levels. We expect the same here in the U.S. as long as the vaccine rollout continues to go well, and the economy responds positively. Once international travel resumes toward 2022, we’re likely to see a positive effect on the global economy as well.
What investors can look forward to post-Covid
As the U.S. is innovating in certain sectors, it would be wise for investors to also consider innovations that are happening globally and how that could impact your portfolio. Digital payment, for example, is a trend that is expected to continue. In emerging markets, digital payments take precedence over cash. This trend is leading the way in Asia right now, and the U.S. and Europe are expected to follow.
The same could be said for renewable energy sources. Europe and Asia are investing heavily in renewable energy, and with the administration change here in the U.S., we expect that utility companies will continue to grow and continue to invest in renewable sources. 10 years ago, the cost was too high, and the technology just wasn’t there. But over time, we may see a gradual shift toward more diversified energy sources.
Is Covid still a threat to the economy?
Covid still stands to be a threat to the economy, especially as mutations of the virus occur. With the distribution of vaccines, however, we’re hopeful that between vaccinations and continued social distancing, we’re unlikely to see the surge of cases that we’ve experienced in the past and can start to achieve herd immunity. When we look at Asia, we have hope that a return to normal is achievable: in many parts of Asia, businesses are open, children are in school and people have been able to return to somewhat normal lives.
Global portfolio diversification with Chatterton & Associates
As the economy continues to recover in this post-Covid world, we’re here to help. If you want to reevaluate your investments and are in a position to diversify your portfolio to accommodate global shifts and trends, contact us today. We will ensure that your risk level remains comfortable and that your portfolio is sustainable while discussing the options available to you.
Sincerely,
The Team at Chatterton & Associates
Although the information has been gathered from sources believed to be reliable, it cannot be guaranteed. Federal tax laws are complex and subject to change. This information is not intended to be a substitute for specific individualized tax or legal advice. Neither Royal Alliance Associates, Inc., nor its registered representatives, offer tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.
