If you think the economic recovery prompted by the many effects of the COVID virus will be like past economic recoveries, think again.
This is a global event and it has happened at unprecedented speed worldwide. It is a delayed virus and affects people who gather in groups.
Now, predicting economic recoveries is a tough task, but in this podcast economist, Nouriel Roubini gathers the current data and makes economic and market forecasts that incorporate real-world economic and financial conditions faced by average people and their employers.
The reality is that many people will not get their old jobs back, restaurants will go out of business, and people will be spending much less. It is recessionary and deflationary in the short-term, he said. People will become part-time workers or unemployed, plus they will have huge amounts of debt. This means average Americans will be spending less, and they will have diminished savings.
This is a pessimistic economic forecast, but with income gaps at their largest levels in modern times, accompanied by poor savings rates, unprecedented Fed bailout activities, and job insecurity, this forecast seems to align with current economic dynamics and household financial situations.
This will also have a huge impact on wealth management and financial planning, so advisors should take note and become more realistic in their client discussions. The future will not be like the Never-Never Land discussions of years past. Ask Disney Corporation if you don’t believe this.