Is An Economic Boom On the Horizon? Who Will Benefit?

~ Laura

With the end of his junior year of college in sight, Jonah has been spending hours studying the job boards at his university. He’s looking for a paid summer internship and also getting a feeling for what’s waiting for him after graduation.

The opportunities for non-STEM folks are slim right now. He applied to the few listed jobs, but hearing nothing. He did an unpaid remote internship last summer, so he doesn’t need to do that again. Restaurant work is always an option, if he just wants to pull in some dollars.

I’ve told him to keep an eye on that job board. I think that things are going to change soon, now that people are getting their shots and leaving the house. Why am I so optimistic? I’ve been whispers from here and there about the fact that folks with major cash are starting to spend again.

Rich people like to spend money. They like to spend money on themselves, but this year they couldn’t go on lavish vacations or buy status items to show off their wealth. They also like to spend money on investments that will multiple their money, but those investments were in hibernation this year. That’s all going to change very quickly.

One whisper came from my dental hygienist. As she scraped my teeth (ugh), she told me that one of her sons was building a new travel app to compete with Kayak. She said that he said he was able to attract major, major money from investors.

Another whisper came from a friend who has two sons who graduated this year with a BAs in computer science. Their first year salaries are in the six figures. One had an internship last summer that paid $12K per month.

Another whisper has come, weirdly enough, from the gossip blogs. Worried about Ian’s post-high school plans, my insomnia kicked into high gear this week. So, I’ve been reading crap about the Pitt-Jolie divorce and Harry and Meghan. There’s been lots of buzz about Harry’s new job as Chief Impact Officer at BetterUp, a mental health app that sounds like Noom, but for people who want to feel happy.

Some of the gossip revolves around the fact that Harry, who barely finished high school, is approaching these guys who have MBAs from Harvard and computer science degrees from MIT and demanding a seat at the table. Those guys must be pissed about this, because they told everyone about it. Apparently, BetterUp isn’t the first company that he hit up.

Other gossip involves this company itself. It apparently isn’t a nice place to work. And they, too, have been getting buckets and buckets of money from investors.

Maybe monetizing mental illness is going to be very profitable. The article that I just did on boys and mental health at Edutopia has been on their “most popular” list all week. Educators and school administrators are projecting a major disaster, when schools open up this September.

But maybe we’re looking at another tech bubble. People investing just because they sat on money for too long, and they want to get in on the ground floor of the Next Big Thing.

That picture above is from an old department building in Philadelphia, when all the cities boomed during the Industrial Revolution. Are we approaching a similar economic boom?

So, what am I doing with these whispers and hunches? What advice am I giving my kid and nieces who will be on the job market in the next 12 months?

If a paid internship doesn’t open up for Jonah this summer, I’m going to steer him away from the quick money at a restaurant and towards computer science, business, and mental health classes at the local community college. So far, he’s been taking traditional liberal arts classes at his college. Businesses will need people with word and language and thinking skills, so that liberal arts degree is very valuable. He doesn’t need to be a computer programmer to take advantage of the coming job boom, but it might be help him to say that he understands that world. Since the number of college graduates, particular boys, won’t be plentiful this year, he’ll have even more advantages.

The travel and mental industries are clearly going to see major growth next year. What else? I think anything to do with private education; too many parents left public schools for good. I’m not sure if the work-from-home thing is going to stick — Steve’s office never downsized, though he’s still home for now — so I’m not sure if companies like Zoom and other remote-work platforms will expand. Um. Not sure. Curious what you all think.

If you had buckets of money, what industries would you invest in?

Published by Laura

33 thoughts on “Is An Economic Boom On the Horizon? Who Will Benefit?”

  1. It’s probably too late now, but I think there’s going to be a huge amount of travel and restaurant business for at least the next year, and a continuing construction/remodeling surge. I personally am expecting to spend a lot of money compared to the 2020 baseline on travel, restaurants, remodeling and personal care (haircuts and gym).

    Something I’ve noticed is that pay for entry level low-skill jobs has been floating upward, with a combination of raises and bonuses for grocery and similar workers. A new Amazon warehouse is being built in our area, and all of those jobs are going to be $15 and up (TX minimum wage is $7.25).

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  2. I’d be inclined to say the restaurant money will be a better bet. Many tech companies lose money. It’s possible to get lots of investor money, but never turn a profit.

    Today: https://www.bloombergquint.com/business/wall-street-banks-anticipate-sec-inquiries-into-spac-market

    https://wolfstreet.com/2021/03/16/spacs-lining-up-as-next-wtf-chart-of-the-year/

    It feels like a bubble. SPACs have reportedly been making money for their organizers buying unprofitable tech companies.

    Have you read about Greensill? It’s an international, Australia/Europe/Japan/UK story, but it’s interesting reading.

    It feels like a bubble. For Jonah, learning to program can help, but only if he likes doing it. Does he feel drawn to accounting?

    Again, it feels like a bubble, to me.

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    1. Working at a startup when you are young and can take the risks and look for something new isn’t a bad deal, especially when they are floating in money they don’t know how to spend. Say for example, I know of a few start ups that make equipment for neurophysiology labs. They are hiring interns, mostly to solder custom equipment. The companies aren’t necessarily in it for the long run. Their method could take off, but the goal is to be bought out with a “wealth event”. Interns don’t get to participate in the wealth event, but they get paid well while the money is being spent. But, I think to attract eyes, you do need to be a STEM major.

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    2. Startups aren’t bad when you’re young and can weather both the demands and the occasional sudden “good luck cashing your last paycheque” moments — as long as you aren’t banking on stock options paying off. I worked in a dot com in the first dot com wave and it was good experience even though the shares ended up worth less than the option and we watched the ping pong table being hauled off.

      Having tech on your resume isn’t a bad thing even if you pivot to a Masters in Counselling at some point.

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    1. Laura said, “Also — art and luxury goods.”

      And nice clothes to wear outside the house.

      And anything recreational.

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    2. The WSJ article talking about people who found an extra million in cash so that they could scale up their NYC apartment purchase speaks to who has money to spend, as does the data saying the second home market & the 2+ million dollar house market is trending up. The Beeple/NFT art market (which also seems to be block chain/speculation/tax evasion/money laundering) also seems to be doing well. And, collectibles (sneakers, pokemon cards, . . . .). All money chasing somewhere to go.

      I don’t know if it produces an economic boom, though it can, because money does trickle. I hate it so much.

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  4. My boom was last year. Nobody wanted to hire anybody new, but they still needed stuff done. I’m just spending it now.

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  5. On the work from home note, Microsoft announced this week that people can come back in our neck of the woods. And, the business news is that folks haven’t downsized their office space.

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    2. So, on the work from home note. And coming from NZ – where we’re been (mostly) out of lockdown for getting on for 9 months now.
      Work from home is still a big thing. Maybe not full time – but at least some days a week.
      Businesses have been bitten by several yo-yos where we had community cases and mini-lockdowns or restrictions. Having staff able to easily swing into remote – because they’re doing it some days each week – has been a huge bonus for companies (well, those that don’t rely on in-person). The big-corporates didn’t miss a beat as NZ swung in and out of the latest round of social-distancing, numbers restrictions, and actual lock-downs. Hospos and in-person services suffered a lot, though.

      Hearing a *lot* of concern about new variants – which may not be covered (or not ‘as’ covered by the vaccine) – businesses are being really cautious about the potential for new surges of case rates – and the consequent business impact.

      Our central business district is still hollowed out. Some of the cubicle rats are back – but all of the ‘service’ businesses (everything from cafes to shoe repair kiosks) there are finding it really tough (a lot of closures, and no one opening up in the space)

      I’ve moved to having a regular day in the office- which has just snuck up to 2 days – because we have so many new clients – and bedding them into our processes is a big part of my job – co-ordinating all of the different ‘moving parts’ to make this happen just works better in person than by zoom.
      But at least 50% of the office is remote – with a one-day-a-month in-office meeting/briefing/building social cohesion day.

      I’m hearing a lot of chatter about NZ-based businesses having greater success marketing and making pitches internationally. When it’s a zoom call – it doesn’t matter to the company if you’re across town or on the other side of the world.

      The loose money sloshing around in NZ has mostly gone into housing – either do-ups of your home, or buying a rental (it’s a traditional Kiwi investment pathway) – which has had a horrendous effect on an already inflated housing market ($150,000 average price increase in the last 2 months). We’re waiting for the bubble to burst (or preferably gently deflate) – but no signs of this. Govt has just put in place some stringent tax provisions around rental property ownership – but the talk seems to be that it won’t have the effect they want. [NB: this is a crisis that’s been a long time building, but has just become critical in the last 2-3 years, and an emergency this year]

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  6. I think it will be a while before the office space market stabilizes. My company has been downsizing its office space, and is thinking about how to handle return to office. I know some of our competitors are doing the same, and others aiming for a return to business as usual. I also know through contacts of a few smaller businesses whose leases expired during the pandemic and they moved their stuff to a storage locker and the cloud. Not sure if or when they will want to open a new office.

    As for where to invest, I am hopeful that this article’s predictions pan out: https://www.nytimes.com/2021/03/13/upshot/economy-optimism-boom.html

    If they do, you’ll do well investing in just about anything.

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  7. Although Canada’s recovery may be slow and we’ll have a rolling economic impact (I remember the other crashes), I am actually feeling optimistic about Martial Arts and great after school care/tutoring/fitness/social skills.

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    1. Jenn said, “I am actually feeling optimistic about Martial Arts and great after school care/tutoring/fitness/social skills.”

      Yep!

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    2. I agree. It’s the kind of thing where hanging on through the crisis might make all the difference. We’ve lost a 100 year old bakery, but, I think, in that example, it was probably a business that people were ready to move on from.

      I also think local “treats” (flowers, food, drink, . . . ) will experience an upturn when people are still limited in their ability to travel.

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      1. bj said, “I also think local “treats” (flowers, food, drink, . . . ) will experience an upturn when people are still limited in their ability to travel.”

        Yeah, that’s definitely an issue–even assuming you are vaccinated and have a big pile of money for travel, would you want to go visit places overseas that are locked down and not a lot of fun right now?

        Hawaii is poised to have a really good year, as is Disney. I don’t know what the latest is, but there’s been an ongoing stand-off with Canada over Alaskan cruises.

        https://cruiseradio.net/u-s-seeks-compromise-with-canada-to-save-alaska-cruise-season/

        Hopefully they work that out.

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  8. Looking at where the demand is here (and this is in an economy which is officially in recession):

    Tutoring – both in and out of school. We have a long-standing relationship with a fabulous retired teacher, who has a fantastic grab-bag of teaching strategies for neuro-divergent kids. She’s made a huge difference to Mr13 – and he’s just about ready to go independent.
    But I am getting *constant* queries from friends over who we use, and where the best results are.
    Two things going on here: Parents have seen the quality of education via the zoom classes, and are no longer happy with the pablum pushed by the teachers that ‘little Johnny is up with the rest of his class’. And the second is that some kids have been badly affected educationally by lockdown, and parents want to remediate (because they know the schools won’t)

    After school activities: I’m seeing hugely increased ads for sporting, creative and adventure-based after-school programmes. Parents are really keen to make up for a year in lockdown, by giving their kids access to all the stuff they missed out on. This is heavily skewed to the middle-upper end of the income bracket. Lower end have no spare cash, and those programmes are struggling.

    Real-estate: Those agents are creaming off the profits from the housing boom. Serious money being made….

    Construction industry (it’s not just people in hard-hats with hammers) – huge building/renovation boom. Architects, planners, engineers, anyone involved in infrastructure design, planning or delivery are all doing well. I have a mate who’s a surveyor – his business is booked solid for the next 18 months – and he’s desperately trying to hire staff (with little luck)

    What’s not doing well:

    Tourism is still flat-line and barely breathing.
    We’re awaiting an announcement of a travel bubble with Australia, but the impression is that our Govt is being dragged, kicking and screaming, in this direction – and they’ll shut it down at a moment’s notice (if there’s a Covid case in Oz) – which doesn’t give tourism-based businesses much security.
    NZ tourism operaters depend on a steady stream of international tourists … and it just isn’t there.

    Import businesses
    Virtually all our freight is sea-freight now (used to be about 50/50 air/sea). NZ is still really badly affected by the shipping crisis (and a stuck container ship in the Suez Canal isn’t going to help). Anything shipped here (and we know this in depth, because it materially affects our business) – has really unreliable arrival dates, and just takes a lot more time than customers are used to. Businesses have a lot of very unhappy customers, and are feeling quite shaky, and certainly not confident to expand. (I think a lot of this is perception, not reality – but when you have customers constantly complaining, it’s hard to think that all the other businesses are in the same boat – and there’s nowhere for the customers to go….)

    Hospo businesses
    Really rocky. They can have really good days/weeks (we’ve just had the America’s Cup – with a boom for the Viaduct harbour eateries from the packed-out crowds). But they operate on the thinnest of margins, and can easily go under. We’ve had high-profile restaurants go out of businesses – even months after we came out of lockdown, simply because the cash-flow was unreliable.

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  9. I see many empty storefronts around here. A local mall will be torn down. As to office space, I believe for most businesses, there will be a need for office space with small group meeting space, but it’s not necessary to set up a desk for every employee. They can push paper from home.

    I think the opportunities for local tourism and entertainment will be healthy, but there’s a shortage of lumber, and with everyone retrofitting home offices, etc., finding construction people is challenging right now. I know people who want to have work done, but all the contractors are working flat out.

    I’m sure my friend’s sons who chose to go into construction and landscape design will do well, but they chose those fields during high school. Both fields go through boom and bust cycles.

    Have you heard of the container ship blocking the Suez canal? https://time.com/5950030/suez-canal-boat-stuck-cost-billions/

    Sorry to be a wet blanket, but I’m old. When everyone is jubilant about the economy, it’s time to run for the exits.

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  10. I find the juxtaposition of

    Some of the gossip revolves around the fact that Harry, who barely finished high school, is approaching these guys who have MBAs from Harvard and computer science degrees from MIT and demanding a seat at the table. Those guys must be pissed about this, because they told everyone about it.

    and

    Businesses will need people with word and language and thinking skills, so that liberal arts degree is very valuable. He doesn’t need to be a computer programmer to take advantage of the coming job boom, but it might be help him to say that he understands that world.

    quite amusing.

    I mean, I have no doubt about the jaundiced view that the tech guys have for Harry. He is just a glorified marketing and PR guy and the tech people have always held the soft skills marketing/PR/communications people in the greatest of contempt. In fact, it is difficult to exaggerate how little they are esteemed by the people who consider themselves (mostly correctly) to be doing the actual work.

    But if that is true at the higher levels of the industry, it is doubly true at the working level, where the tech people consider the liberal arts people to be worthless hangers-on, hopping on to the bandwagon to get paid for other people’s work.

    Also, it’s a myth and a fraud that the tech people don’t have these soft skills. Remember, math and physics are liberal arts degrees (two of the original liberal arts, in fact) and quite a few of us learned to read and write just fine.

    It is true that during the tech booms with all this excess cash sloshing around the soft skills people are hired in abundance. But when the money gets tight and people figure out that they can’t actually *do* anything tech-related, they are often the first tossed over the side. I saw it happen in the 90s-00s, where a lot of people found these jobs in tech and then were laid off when everything crashed.

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  11. I was a political science major, but I also had a second major (which is a souped-up minor) in computer programming. The latter got my foot in the door for my first job; the former made me one of the most valuable new employees in the company – my raises my two years there before graduate school were the highest in the company percentage wise. The hardest thing is getting your foot in the door for liberal arts majors, but once you’re in, you often do quite well.

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    1. The latter got my foot in the door for my first job; the former made me one of the most valuable new employees in the company

      Yes, but you could program.

      When I was in grad school I got to teach the sophomore discrete math class for comp sci. The class was half CS/engineering and half business school MIS majors. The grades were completely bimodal. The CS students all got As and Bs and the business students all got Cs and Ds. This was the 90s, so I have no doubt all of them got jobs. I also have no doubt that the majority of the MIS students were the first ones pink slipped around 2000 and that those pink slips were mostly well-deserved.

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      1. From my experience, many of the people I worked with who were pure programmers got jobs, but they didn’t advance much. Even in programming, moving up required soft skills, like writing, managing teams, interacting with clients. Few of them were able to do that. I worked as a contract programmer during the summers in grad school as the $$ beat out teaching a class or anything like that. Every time I did, I had at least two job offers: one from the firm that contract hired me to do the job and the second from the client. There was such a shortage of people who could code and do management related stuff. The former is MUCH easier than the latter in my experience.

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    2. I’ve been working in medical research for twenty-five years now as an ABD in political science. It’s a living.

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      1. My experience is that many poly sci and econ majors have hard data analysis skills that are useful. My advice (which I am giving to my son who is leaning towards the social sciences) is to take some stats and coding classes in addition to the econ classes. That should make someone perfectly employable as a data scientist/statistical analyst if nothing else.

        Economists respect mathematicians more than they respect themselves anyway. In grad school the best econ students took courses in our math department. I was hanging around with one of them when she introduced me to the chair of her department. Without knowing a thing about me he told me that if I wanted to come over to the department I would “never have to teach again.”

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      2. “Economists respect mathematicians more than they respect themselves anyway.”

        I once asked a friend who is an Econ PhD and is now a tenured prof what skills students need to be an Econ major. He said,
        “First, math. Second, math. And third… I’m going to go with math.”

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      3. They want to be sure they don’t accidentally hire an economist without subject-specific knowledge that they can criticize the assumptions behind the math.

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  12. My coding skills were also very important in the work that I did. My skills were rooted in a little bit of formal education, they were mostly home grown and customized to the work I was doing, so I do not know how they would have transferred to non-academic work, if that had been necessary.

    I do think that strong quantitative skills and coding are beneficial for a lot of different kinds of work today and I worry about those who don’t acquire them along the way somewhere.

    But I’m wary of any argument that any one skill is a core that can take you anywhere. Folks argue that for writing and for math, but watching the battles among economists & epidemiologists & biologists & statisticians in the analysis of the pandemic has made me very wary of people who think they have the skills to apply to everything without listening (not believing blindly) the people who are immersed in the field.

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    1. ds said, “Warehouse work will not do well.”

      Long-term, yeah. Short-term, there’s going to be a lot of work.

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