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Key Themes For The New Normal Economy

The Blue Water Team

As the COVID-19 pandemic recedes, we can expect to see long-lasting change affected by the pandemic. In this New Normal Economy, investors should be aware of five themes that will be prominent. 

The Need to Reduce Debt

COVID-19 had a large, and negative, impact on the economies of many states. At least 26 states are facing budget shortfalls because of pandemic job losses and shutdowns. 

These states must find a way to make up their shortfalls. The $350 billion in aid dedicated to state and local government by the American Rescue Plan will help, but will not make up for ongoing shortages caused by new, pandemic-fueled lifestyles. 

For many states, legalizing cannabis could provide the income needed. The benefits of legalizing cannabis are evident in Colorado, where the state registered $388 million in direct taxes just in 2020.

Last fall, 5 states took action on legalizing cannabis, putting the matter on election ballots and voters approving the measures. Five more states have cannabis legalization on their 2021 legislative agendas. 

The Rise of FinTech

The pandemic drove the establishment of e-commerce stores and widened the embrace of various forms of digital payments. 

This shift to digital payments has occurred about 3 years faster than it would have if the pandemic had never occurred. 

Today, consumers are ready and willing to spend, with a $2.2 trillion increase in spending power. It is likely, however, that they will want to make their purchases using the same habits they developed during the pandemic, including online ordering, digital payments, and cryptocurrency. 

Businesses will need to meet consumers' preferences, while FinTech businesses creating infrastructure for digital payments are also likely to thrive in the New Economy. 

Robotic and AI Supply Chain Solutions

A surge in global economic output and an increased willingness from consumers to spend is overtaxing the current supply chain. The cost of shipping, for example, has doubled since October. The price of goods is also rising. 

As a result, the New Normal Economy is likely to include investments in building up the supply chain, including investing in technologies that can limit supply disruptions. Robotics and automation, for example, will be increasingly important in building up and maintaining robust supply chains. 

U.S. Infrastructure Development

The pandemic has created a combination of issues that make aggressive government intervention a strong likelihood for the New Normal Economy. These issues are: High unemployment, low interest rates, and a GDP output gap that indicates an underperforming economy. 

One area where governments can invest for economic growth is in infrastructure development. President Biden's American Jobs Plan, for example, sets aside money for infrastructure-specific projects that could add 2.3 million jobs by 2024. 

Renewable Energy and CleanTech

COVID-19 highlighted the reality that some crises do not respect borders. Some tasks, such as cutting down carbon emissions and controlling viruses, require nations to work together. 

Investors who recognize and take into account these trends may stand to benefit the most from the New Normal Economy.  Check out our range of investment ideas.


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