Mark Blezard comments.
A difficult question that I cannot answer with certainty. However, read on because I have a particular spin on this. But, firstly, please note that I am an eternal optimist, sometimes to my detriment!
So, with my half-full glass, here goes. Let's look at the facts. The World Bank, and other financial institutions, are forecasting a double-dip recession. One report I read had more dips than my son's hand in a loaded sweet bag. And it got me thinking: says who? Where are they getting this data or opinion from?
The problem with news, at the risk of sounding like the last US president, is that a lot of our news is shoddy. Very few articles 'trend' because of good news. Shocking headlines always do better than a 'cat up a tree being rescued' story.
More difficulties arise because, certainly in previous recessions, such news fans the flames. It becomes a self-fulfilling prophecy. "Oh no! Baton down the hatches. We're all going to die." So, time for a different spin.
1) Money doesn't disappear. Think of it like the tide of an ocean: it goes out and comes back in again. In most recessions, money was squirreled away, converted into gold, or just sat on. It was still there. In physics, we would liken this to 'potential energy', having pushed a rock up a hill (kinetic energy and hard work) it is full of potential energy. You got it, it's coming back.
2) The pandemic is not a recession. It has displaced markets and altered spending patterns. Yes, we might experience a recession in the eyes of the economists, but you can't overlay traditional recessionary statistics to predict this one. Why? See point 3...
3) Unlike previous financial disruption, we have a way out: the vaccine. Why do people take drugs and alcohol? Because it takes them to a better place, or so they think. We've all been suppressed for some 12 months now, some more than others, but we are all full of 'potential energy', about to burst. And guess what, we have a vaccine to make us happy again.
4) Jack in the Box. To follow on from point 3, we are sitting on a Jack in the Box. Amongst other markets, I work in the tourism sector. The last 12 months have seen a successful holiday rental business go from 80% occupancy to less than 5%. Speaking to my property manager, he rightly pointed out – everyone is desperate to get away and get a bit of sun. I quote, "We are preparing for a manic surge shortly after Easter."
And there you have it. My opinion is that this 'tide' will come in faster than ever before as we all try and snap back to normality. It won't be the same 'pre-pandemic' world/economy, many people will have been displaced, but many new opportunities will rise from these ashes. And these opportunities are what I'm basing my 'roaring ‘20s' prediction on. This is an entrepreneur's feeding frenzy, and entrepreneurs create the stable, good times for everyone else.
Having read this far you will know that I'm not an economist. However, I do read The Economist and often think that they over-analyse things. What we do know for certain is that we are human beings with over 300,000 years of history of heading in the direction of 'something nice'. We've all had our sweeties taken off us and we want them back! It happened in 1920 and is likely to happen again. We just need to learn from the lessons of previous 30’s!
Thank you to AnnaliseArt for this wonderful picture.