A Bold Prediction for 2021’s Market

The year was 1945.

Americans were rationing and saving whatever they could, unemployment was at record highs, the economy was right on the edge of an uncertain future.

The United States was wrapping up World War II and no one was quite sure how the country could possibly bounce back.

But then came 1946… which began one of the strongest and longest time spans of economic expansion in our nation’s history.

Now we’re emerging from a different kind of war…

In 2020, we all watched as businesses shut down… we saw last March and April when the stock market entered into a free fall… families struggled to make ends meet and the coronavirus death toll ticked higher every day.

So it’s hard to imagine things getting back to normal.

But I have some good news straight from the mouths of some of the biggest names in finance…

Economists aren’t just expecting a return to post-pandemic growth — they are predicting we are about to enter into a period of growth like we haven’t seen since the postwar boom of 1946.

2020 might’ve slayed the 11-year bull market. But in 2021, the bulls are back and better than ever!

Government Aid

Let’s rewind a bit, back to the post-World War II era.

Americans had endured more than three years of wartime rationing policies. The government encouraged them to save their money and invest in bonds. Factories were used specifically to churn out war-related equipment and products.

All that created consumers brimming with pent-up demand.

Scarcely any money had been pumped into the economy… and when the war was finally over, people were ready to spend.

They made big purchases like homes and cars, but didn’t discriminate — spending their money on shoes, clothing and nonessentials.

It’s not exactly the same as this past year… but it’s pretty darn close.

While the U.S. government back then didn’t put that money in people’s pockets directly, they might as well have.

It’s All About the Stimulus

In 1945, it was government-sanctioned saving that led to the following year’s boom.

But it ended up acting just like a stimulus check.

This time around, the government opted instead to just pay people to go out and help the economy.

The three checks were pretty strategic in their timing (even if accidental).

In April 2020, most citizens received at least a $1,200 stimulus check. I’m sure people spent that money in a variety of ways, but I’ll tell you my main experience with that payment…

My friends immediately began texting me, asking how to invest in the market and where best to allocate these newfound stimulus funds. They clearly weren’t alone, as I’m sure you’ve noticed the market rebound since the payout hit people’s accounts last year.

Some people I know paid off credit card debt, which would later open them up for more consumer spending.

My own stimulus check finally gave me enough to put a down payment on a house, and a few months later I became a first-time homeowner.

The third check, which was the $1,400 sent to Americans last month, played a different role.

People had paid their debts, bought houses, invested… so they were ready to do some 1946-type spending! This time around, people have gone back to retail shopping, traveling and buying household appliances.

I followed the same trends of my postwar counterparts — using much of my third check to buy all the items for my home I had put off buying for the majority of the year.

JPMorgan predicts all these spending spikes could take us well into 2023, pumping up the U.S.’s economic expansion with every purchase.

And Goldman Sachs raised its U.S. growth projection for this year to 8%, which would constitute the largest economic expansion in generations.¹

There are those who have their doubts. I’ve even been one of them.

I’ve worried the growth we’ve experienced is hollow. But I didn’t take into account how much I’ve contributed to the economy in the last year, or how much my friends, co-workers and family have contributed.

The pandemic was unprecedented, but while history might not repeat itself… it often rhymes.

And 2021 certainly looks to be playing a very similar tune to 1946, which bodes well for America’s economic future.

Sincerely,

Brittan Gibbons-O’Neill

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Brittan Gibbons-o'neill