Biden is Stepping into a Goldilocks US Economy, and more stable Middle East
Here are 5 Reasons for Optimism
Similar to his former boss, president-elect Joe Biden is inheriting a currently struggling economy but unlike the last economic cycle, the current economy is positioned to have a fast rebound post-pandemic for several reasons.
First, there is not any excessive investment in any one sector that needs to be unraveled—there’s nothing fundamentally “broken” that will take time to mend. President Obama dealt with the aftermath of the Global Financial Crisis. Secondly, the shutdowns in the spring provided the economy with a foundation upon which to build. The process of rebounding from the shutdowns will continue to create opportunities for growth. Unlike the last recession, reduced spending, a federal stimulus and increased home prices have helped households net wealth beyond pre-pandemic levels, leaving families in a better financial situation. Another driving force of a quick rebound is the number of millennials who are entering their prime homebuying and earning years, unlike in the last recession when this generation was just entering college. Add in the fact that household savings have grown by more than $1 trillion, which will fuel the fire for a hot economy post-pandemic. Knowing a vaccine is on the horizon will also help spur recovery and allow the economy to bounce back to pre-pandemic levels or higher.
Lastly, and perhaps most importantly, is the fourth industrial revolution—a fusion of advances in artificial intelligence (AI), robotics, the Internet of Things (IoT), 3D printing, genetic engineering, quantum computing and other technologies—which will continue to change how we live, work and communicate.
The road ahead will be bumpy and the stock markets are likely to face much turbulence on the way up, but all signs point in a north-easterly direction.
As it relates to Israel, the progress made my President Trump in the middle east will likely continue in the region providing an environment for Israeli equities and the economy to grow over time. We expect equites, such as those held through The Jerusalem Portfolio to provide a great opportunity for appreciation over time for those looking to invest in Israel and to participate in Middle East economic expansion. Israel Bonds, while providing stability and safety, are not expected to provide the same level of appreciation or growth as equities over time.
By Selwyn Gerber and Jonathan Gerber