Personal Finance News

There is no doubt that the coronavirus pandemic will change the world. In fact, it already has changed the world, and it will keep going. Many of the reports and forecasts you can see today show devastating losses in some industries. Forecasts from economists and other experts predict a grim future drawing parallels with the Great Depression. Seeing how many businesses are failing because of lockdowns, a tragedy seems inevitable.

However, while this all is happening, some industries are growing and values of some assets are going up. It’s true that many companies are failing, but there are also those that report record increases in revenue. The stock market has all but recovered, largely due to the rapid gain by tech giants.

It’s true that there is a lot of uncertainty still. It’s also a fact that the global economy is going into a dangerous recession. However, while stressful the situation is not necessarily tragic. Changes will continue to spread as investors are reallocating their funds. Businesses will close and others will open. The change in consumer behavior will stick and we can expect to see even more overall digitalization.

But the real question is whether the powers that are going strong will be enough to hold the global economy back from total collapse?

Some Industries Are Doing Very Well Despite the Pandemic

Looking back at previous economic recessions, one thing remains quite stable. As the economy crashes, so do house prices. However, while the COVID-19 crisis is definitely one of the worst, its effect on real estate is different. Home prices continue to rise. In some countries, for example, Germany and South Korea, the housing market is growing so fast that local governments have to implement buyer restrictions. Even in America, which is admittedly struggling during this crisis, real estate value keeps increasing.

For the real estate market, the main reasons for growth are policies and a big change in buyers’ preferences. Lenders have to lower interest rates in response to the crisis. Governments in richer countries also launched policies that offer some leniency, like banning foreclosures for the duration of the pandemic. People also became more interested in purchasing bigger homes with gardens in suburban areas. The latter is, no doubt, in response to many companies accepting remote work as the new norm.

Residential real estate isn’t the only sector that’s doing well. Technology giants and startups alike are enjoying robust growth in this otherwise difficult time. As so many aspects of our everyday lives are getting transferred online, businesses that facilitate this transition are getting an unprecedented boost in interest.

Investors definitely caught on to that. Therefore, they started putting their money into tech companies and other industries that are fueled by the pandemic. Healthcare is definitely at the top there.

Even retail trade isn’t doing too badly. It’s true that the overall consumption level has gone down. This is an expected trend for an economic recession. However, online sales are growing super-fast. Therefore, online retailers, and the ones that were quick to change, are getting bigger revenues despite the pandemic. [Read more…]

The 50 richest Americans now hold almost as much wealth as half of the U.S., as Covid-19 transforms the economy in ways that have disproportionately rewarded a small class of billionaires. Bloomberg reports:

New data from the U.S. Federal Reserve, a comprehensive look at U.S. wealth through the first half of 2020, show stark disparities by race, age and class. While the top 1% of Americans have a combined net worth of $34.2 trillion, the poorest 50% — about 165 million people — hold just $2.08 trillion, or 1.9% of all household wealth.

The 50 richest people in the country, meanwhile, are worth almost $2 trillion, according to the Bloomberg Billionaires Index, up $339 billion from the beginning of 2020.

Covid-19 has exacerbated inequality in the U.S., with job losses falling heavily on low-wage service workers and the virus disproportionately infecting and killing people of color. Meanwhile, many upper-middle class professionals are working from home, watching their retirement accounts rise in value after the U.S. Treasury and Fed pumped stimulus into the economy and markets.

Another key reason for the wealth disparity is that the vast majority of Americans aren’t benefiting from rising stock prices. The bottom 90%’s exposure to the stock market has been dropping for almost two decades. Since peaking at 21.4% in 2002, upper middle class Americans have seen a 10 percentage point decline in their equity interest in companies. A similar pattern is seen among the bottom half.

According to new research from eMarketer, the cable, satellite and telecom TV industry is on track to lose the most subscribers ever. This year, over 6 million U.S. households will cut the cord with pay TV, bringing the total number of cord-cutter households to 31.2 million. TechCrunch reports:

The firm says that by 2024, the number will grow even further, reaching 46.6 million total cord-cutter households, or more than a third of all U.S. households that no longer have pay TV.

Despite these significant declines, there are still more households that have a pay TV subscription than those that do not. Today, there are 77.6 million U.S. households that have cable, satellite or telecom TV packages. But that number has declined 7.5% year-over-year — its biggest-ever drop. The figure is also down from pay TV’s peak in 2014, the analysts said. 

The pay TV losses, as you may expect, are due to the growing adoption of streaming services. But if anything, the pandemic has pushed forward the cord-cutting movement’s momentum as the health crisis contributed to a down economy and the loss of live sports during the first part of the year. These trends may have also encouraged more consumers to cut the cord than would have otherwise.

“Consumers are choosing to cut the cord because of high prices, especially compared with streaming alternatives,” said eMarketer forecasting analyst at Insider Intelligence Eric Haggstrom. “The loss of live sports in H1 2020 contributed to further declines. While sports have returned, people will not return to their old cable or satellite plans,” he added.

NBC News spoke to 21 people who said they were hooked on casino-style apps and had spent significant sums of money. The industry is almost entirely unregulated. NBC reports: