As we look at returning back to normal we must ask ourselves how the current (2020/2021) economy is doing so well and can it keep going. The short answer is no it cannot keep growing and the long answer is a lot more complex. I am a believer that everything that goes up has to come down, but that doesn’t necessarily mean a crash.
We need to consider that the economy and stock market were doing very well in 2019 pre-pandemic. We had low unemployment, steady growth, low but manageable interest rates, etc. Now fast forward to 2021 in middle of a pandemic (hopefully on the back end of it) we have higher unemployment, government buying corporate bonds to keep the market going, large distribution of funds to people, high inflation, large government infrastructure plans, home prices and rents skyrocketing, and people not going back to work (this is a whole story of its own).
I believe this is not sustainable and this party has to end at some point. Not to bring political views into this, but I do believe past the midterm elections there will be a change in the government participation in the private sector as well as countering inflation, which will most likely lead to a multi-year decline in the stock market value and in return we will see massive negative economical shifts as people will lose portion of their retirement fund values, home values, etc.
Unfortunately, I don’t see how the U.S. and maybe many other countries dig themselves out of this quickly. This also will start relating to my belief that we will become a Socialist Economy in that when people are ready to go back to work after the government stops sending money out, those jobs may not exist and we will have to continue to take care of those unemployed.