About 85% of Californians expect to get their job back soon, says Barron’s.
While there are some companies that have done well in the COVID-19 environment, many others have not. J. Crew and others are having a tough time, while many technology stocks are seeing record profits, MarketWatch reported.
This crisis has forced many changes and adaptations to company policy, public safety, and governmental activities.
Here are 11 reasons the economy and job market will soon stage a big comeback. Investors should be mindful of these factors when adjusting their investment portfolios.
1. Tax losses can be carried forward. Companies are taking their losses now to prepare to carry these losses against gains in the coming years. This will boost profits and stock prices for small and large companies going forward.
2. PPP money mitigated the damage that could have been done by the shutdown. For the first time in our nation’s history, the government has made direct investment into preserving workers’ rights and ability to get their jobs back and earn a living.
3. Trump’s economy was at a record high. The incoming federal tax revenues were high enough to justify the virus stimulus money. If this pandemic would have happened in 2010 with President Barack Obama’s Swine Flu, the country would have gone into a “double black swan” economic tailspin.
4. Companies are well poised to employ 20 million people in the coming 12 months. With 30 million newly unemployed, companies will begin hiring back people to help with consumer demand. What this means is that companies will hire more people according to expanding demand. Thus, efficiencies and productivity will be maximized.
5. State budgets will need to be enhanced to maintain efficiency. With cutting fat and lowering government waste, the economy could go to new heights. If state governments raise taxes, companies are well positioned to demand “collective bargaining” with city, state and local governments or companies will immigrate to states with smart tax policy and lower regulations.
6. Online Adapting. Business have been forced to adapt in the last few months. Many companies are prepared to make more money online than ever before. Examples are schools, universities, meal delivery and more.
7. Telecommuting will change everything. Businesses and government will allow more people to work from home. This may increase worker efficiency and actually reduce big city pollution.
8. Higher Wages Outside of Big Cities. Governments and businesses may benefit with great cost savings by hiring people outside of expensive cities to do the same job. Thus, the cost of workers will go down while employees outside of big cities would actually have a greater standard of living.
9. Benefits Savings. Business may be able to save billions on benefits. Insurance, education and costs of employees would go down if companies hire the best people inside the U.S. but outside of overpriced states and cities. Example: Some types of insurance such as auto insurance outside of big cities such as New York or New Orleans can be 50% cheaper.
10. Inflation Low. Some of the key costs to businesses revolve around energy costs. Business such as transport, trains, shipping, governments, airlines, data centers, and other energy dependent enterprises all save big money from fuel cost savings.
11. Dividends. Some companies that took major bailouts may be required to stop paying dividends for a few months and abstain from buybacks, but that will only boost stock prices and capital gains.
George Mentz JD MBA CWM Chartered Wealth Manager ® is a licensed attorney and CEO of GAFM ® global education, which is an ISO 29990 Certified professional development company operating in over 50 nations. Mentz is an award-winning author and advisory board member to several companies around the world in education, charities, and FinTech Companies.
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