American Consequences - July 2021

with work environments going from office to hybrid or remote. Banking transactions and other business models, already on transformation glide paths to a digital future, have transformed overnight... As we look to the future, the one certainty is that results will become increasingly volatile and unpredictable as we work our way through the biggest challenges for societal and economic ecosystems since the Great Depression. There are no easy answers and increasingly few sustainable paths. . How many times post-COVID have you gone to your favorite lunchtime restaurant looking to place an order, with no lines, and waited for 10 minutes as they filled web orders? Worse yet, you’ve been told that you must order online. Banking, shopping, reading, and music are now fully digital. Coming soon to a theater near you? Yes, your living room – or hand. Digital health care and diagnostics, insurance underwriting, all streaming in the ether now. What Future? What does all of this mean for CRO X as we look to the future? The distribution of potential future outcomes has become more unpredictable with the chances for extreme outcomes growing exponentially. Today the chances of meaningful inflation or deflation are materially higher than they were

three years ago, as we work our way through post-COVID budget and fiscal realities, and the Fed confronts declining confidence. The potential for divisive political and societal outcomes continues to grow with hard-to- model impacts on national and regional economies and businesses. As we look to the future, the one certainty is that results will become increasingly volatile and unpredictable as we work our way through the biggest challenges for societal and economic ecosystems since the Great Depression. There are no easy answers and increasingly few sustainable paths. The good news is that the world is awash in cash and liquidity. There are over $6 trillion in deposits at banks, more than three times normal levels. Money market accounts are in a similar situation. Investment returns are hard to come by. Bond yields are low and declining for short maturities, with inflation concerns steepening the yield curve. Equity markets are fully valued by any historic measure, yet remarkably resilient, as the liquidity on the sidelines appears to provide a limit to any real downside, at least for now. Residential real estate markets continue to strengthen, and the U.S. consumer, the bulwark of the global economy, continues to spend. At least for the next few years, it seems that people will ignore the ever-growing storms on the horizon and party like it is the Roaring Twenties. I mean, what’s the worst that could happen?

American Consequences

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