What the next 4 years may look at economically. Higher taxes, redistribution of income, bigger government and more regulation all are a proven recipe of the slow growth experience post the great financial crisis in 2009-2016 where GDP averaged a meager 2% or so. During that period wage growth was very sluggish as well as large companies got larger thus having more leverage on labor as immigration exploded pressuring wages further. All these things occurred under the Obama administration as deficits exploded higher as did the national debt. So what will happen with the same policies with the US already at ZERO rates, massive debt and monetary printing and very high unemployment? Look up the word stagflation and you will discover the future. Its likely the low long-term rates may not last at some point as well. Further high unemployment will likely continue for an extended period of time and maybe become PERMANENT like in Europe. Under the existing Trump administration runaway monetary and fiscal policy (albeit lower vs a Biden administration) is no better, but low taxes, limited immigration and prospects of onshoring manufacturing can produce above trend growth and a better employment picture. The pre-covid environment is proof of this despite the drag of a trade war.
These are my thoughts from purely an economic perspective.
In short order, post the election, we will release our Investment Framework for 2021 which will translate the above into how we design our model portfolios for the coming year.
Our model portfolio performance has been updated on our website as of 9/04/20.
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