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5 Predictions About The “New Normal”
The world is changing, faster than ever.
It’s a little bit delayed, but I’ve been meaning to write an article about what I believe is going to happen in the next few years. This pandemic has caused chaos in the world economy and it’s really hard to get clarity on what’s going to happen but I have some pretty good ideas.
COVID-19, The Accelerator Of Change
In the last couple of months, more jobs are deemed obsolete, a lot of innovative technology has been created, and we’ve also experienced a huge shift in behavior for most people and businesses.
The world has seen the immediate impacts of perpetual lockdowns, especially in the travel and hospitality industry, but let me tell you something – it’s not going to end there. While I can’t guarantee that all of these are going to come true, these are things that are likely going to happen in the coming years as humanity adapts to the “new normal”.
While we can sit down and wait for it to pass, it’s always best to see through all the noise and clutter and take action to capitalize on this situation. My heart is out there with all the frontliners and people who have experienced losses due to this pandemic. I hope this resource can serve as a guide to your decision-making process.
1. The new economy will be powered by a hyper-distributed elastic workforce
This is a longer one. We’ve seen first hand that even billion-dollar companies are not equipped to react to a crisis like this pandemic. This is especially true if the company is not in eCommerce, tech, logistics or healthcare. Millions of people and thousands of companies are going to be impacted by this crisis, especially those working in bigger organizations.
Large organizations usually struggle with rapid change. These companies are reacting to this crisis with blanket pay cuts and layoffs, but this is not a sustainable solution in the long run. The case I’m trying to make here is that most large organizations would choose to reduce operating costs and overheads to wait for this crisis to pass.
However, even after that, I don’t think companies will be as liberal in remuneration packages and headcounts. Finance departments will most likely be extremely cautious and start behaving like startups and SMEs by going lean on overheads. However, they still have to get shit done. This is where specialist freelancers and agencies come in.
Employees that are drastically affected by these measures WILL find alternatives to traditional employment. I foresee a significant increase in the freelancing and agency space as more professionals leave their jobs in favour of self-employment.
In my opinion, there are many benefits to this for both parties. Employers get to keep their fixed expenses low, they get a wider pool of specialized talent that they can hire flexibly, and most importantly – they still get shit done. While income is no longer “guaranteed” or “fixed” like in traditional employment, we’ve seen how fragile and at-risk fixed jobs actually are.
In the new freelance economy, employees are almost always getting paid for work alone. You don’t get paid to sit in the office, you can reject projects you don’t believe in, and you are your own boss, but you do have to hustle to get started.
The ideal scenario here is where employers keep a core team of employees that rely on freelancers and agencies for internal projects and specialized execution. This gives room to freelancers and agencies to specialize in a specific field and get REALLY good at doing what they do. Companies pay freelancers & agencies to execute. Employees get to specialize in what they love to do and become happier. The end result? Better quality of work from specialization and happiness from flexibility and fulfillment.
What you can do about it:
Employees, upskill the hell out of yourself during your down times, especially for jobs and specializations that are in-demand and remote work friendly like programming, digital marketing or content creation. If you run a company and you have not hired remotely before, get your feet wet and start restructuring your organization to reflect the new normal.
On a separate note, I firmly believe specialization and collaboration is key to humanity’s continuous progress. The rise in nationalism that is advocated by politicians and world leaders is getting in the way of true progress. Read The Rational Optimist if you’d like to find out more – one of my favourite books.
2. Companies that bring people together will flourish
We all saw Zoom’s meteoric rise in demand over the last few months. As real-life physical events take a huge hit, there’s been a huge rise in digital conferences & webinars.
Bringing people together in a digital environment presents many opportunities, some of which will overlap with the first point. I’ll give some examples, freelance marketplaces bring employers and freelancers together (Upwork saw a 33.33% increase in search volume). Computer/Console gaming brings friends together (Steam saw a 50% increase in search volume).
It’s safe to expect this to be the norm right now. It doesn’t just stop here. I foresee an increase in investments towards developing AR and VR-related technology designed to bring people to hang out together and emulate real-world experiences. With Facebook’s recent launch of Messenger Rooms and their foray into VR/AR with Oculus, I believe they will be the first to launch such a service in the next few years.
What you can do here:
3. eCommerce is the new Commerce
With lower foot traffic in malls and shopping districts, more and more companies are looking to go into eCommerce. When a crisis like this COVID-19 pandemic hits, demand usually impacts necessities first and translates to everything else later.
I did a simple search for “buy online” with keywordtool.io (my favourite trend and keyword research software) and here’s what I found – massive search increase across the board.
With this in mind, I foresee a lot of investment into eCommerce and last-mile delivery infrastructure. As we shift into the new economy, I am extremely bullish on warehousing spaces and last-mile delivery logistic companies but I can’t say the same about office and commercial real estate.
How this will impact you:
On a career level, the most secure job you can get is in eCommerce, tech or logistic/delivery powered companies. Investors can look to invest in fast-growing eCommerce companies and last-mile delivery companies. Not going to say anything for entrepreneurs since it’s obvious where opportunities lie other than staying away from traditional retail.
4. Unprecedented inflation will set in with 100% uncertainty
Federal banks around the world had two tactics to their disposal to tackle an economic crisis. Lower interest rates or literally increasing the money supply by printing money. Unfortunately, reducing interest rates is only possible if interest rates were positive to begin with. For countries like the US, Singapore and Japan that already have close to 0% interest rates as we speak, printing money is the only option left.
In the last two months, the total USD money supply has grown from 3.4 Trillion USD to 5 trillion USD, thanks to the stimulus packages that the Trump Administration has been announcing. With the latest stimulus package as of 16th of May, the money supply has effectively tripled prior to COVID-19 measures. In my opinion, as a part-time economist, this is irresponsible and unsustainable.
So, what impact does this have on the economy? Yes, financial markets get inflated – which is one of Trump’s KPIs as POTUS. However, no real value is created from this transaction. Quantitative easing only serves to prop up nominal prices, not create value in the economy. Therefore, while we don’t feel it yet and celebrate handouts from generous administrations – hyperinflation is going to set in. Mark my words, the same dollar bill will most likely get you far less 1 year down the road.
How this will impact you:
Reduce consumption as much as possible and be on the defence. If you’re an investor and you’re reading this before the imminent crash, I would recommend stocking up on some defensive assets like gold, Bitcoin, cheap real estates, healthcare stocks and safe haven currencies like Swiss Franc and Japanese Yen – essentially whatever that has REAL value associated with it and preferably in countries without insane money printing practices.
Disclaimer: This is just my personal thoughts. I am by no means a certified professional when it comes to investing so please do not take this as professional financial advice – don’t sue me.
5. Years of Cheap Fiat Money
In an effort to stimulate the economy, central banks all around the world are starting to lower interest rates and reduce credit requirements for loan applications. Here’s some proof:
- US overnight rate is currently 0%
- Malaysia’s OPR is at 2%, a 10-year low
- Turkey went from 24% to 8% in just a few months
- and many more (just do a Google search for central bank interest rate)
Glut in real estate markets and credit expansion is most likely the key driving force behind this shift. While this is (again) unsustainable and will lead to another bubble in the neo-economy, there will be opportunities for the wise to increase gearing with cheap money on their businesses or investments.
How will this impact you:
Be on the look out for opportunity for investments. A piece of advice I gave myself here is to pounce at real estate flash sales with close to zero interest rate. Opt to lock low interest rates in (depending on where you live, this may not be possible), even if you have to pay a slight premium. Low interest rates usually don’t last 20-30 years. Coupled with point #4, currencies governed by central banks with weak balance sheets will most likely devalue, so I’d recommend storing some wealth in defensive assets like real estate, safe haven currencies, bitcoin and gold.
Wrapping it up
The pandemic presented a ton of change (and as a result – opportunity). Even though it can be hard, it’s crucial that we look at the bright side and be on the lookout for opportunities rather than mull over things we cannot control. Nobody expected COVID-19 to happen, but you most certainly can take the necessary action to protect yourself. Focus on the things you can control rather than mull over things you can’t control!
If you agree or disagree with me, or if I’ve missed anything – please let me know in the comments section below.
5 Predictions About The “New Normal”