2021_03_25 — “Exciting Numbers! Too Much of a Good Thing Can Be Unsettling”

SOCIOECONOMIC PERSPECTIVE

Exciting Numbers! Too Much of a Good Thing Can Be Unsettling

SUMMARY

  • U.S. business spending has recovered from the shock of pandemic shutdowns
  • U.S. consumers have more savings, higher incomes, and more pent-up demand than a year ago
  • As stated in our December Insight, the vaccination itself would be the largest stimulus
  • — — — But not to be outdone, $1.9 trillion of new U.S. fiscal stimulus will compete for that title along with President Biden’s proposed $3 trillion infrastructure and domestic-needs bill
  • The Federal Reserve has committed to full U.S. employment, which probably means an easy monetary policy for the next couple of years
  • Global growth is recovering on the back of government largesse and vaccination rollouts around the world
  • This environment will probably remain solid for opportunities in the illiquid or private investment areas of real estate, venture capital, and private credit
  • Although a Roaring ’20s theme remains in play, and is our most likely scenario, possible temporary party crashers include inflation and fear of inflation from overstimulation of the economy, along with a host of other risks mentioned below

DETAILS

  1. The American Rescue Plan Act, a $1.9 trillion package of COVID relief that includes checks to 159 million households (up to $1,400 per person, plus $1,400 per child and adult dependent), supplemental unemployment benefits of $300 per week, and aid to states, municipalities, hospitals, and schools
  2. President Biden’s proposed $3 trillion infrastructure, clean energy, education, and domestic needs plan
  3. The rapid pace of vaccinations that will fast-track the economy’s reopening
  4. Global growth recovery that improves revenues for U.S. multinational companies

Endnotes

  • “Why not invest your assets in the companies you really like? As Mae West ‘Too much of a good thing can be wonderful’.” ~~Warren Buffett
  • “Too much of a good thing is just about right.” ~~Jerry Garcia
  • “Too much of anything is bad, but too much Champagne is just right.” ~~F. Scott Fitzgerald
  • “Why then, can one desire too much of a good thing?” ~~Rosalind in William Shakespeare’s romantic comedy, As You Like It (4.1.112–115)
Credit: Collage and graphics by Michael Ashley

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Avid traveler and art fan, also Partner & Chief Investment Officer @Running Point Capital, a multifamily office and ultra high-net-worth money-management firm

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Michael Ashley Schulman

Michael Ashley Schulman

Avid traveler and art fan, also Partner & Chief Investment Officer @Running Point Capital, a multifamily office and ultra high-net-worth money-management firm

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