by Sean Kelly
The holidays are over. As we stash away all the ribbons and bows, they look a bit less colorful than they did just a few weeks ago. We now find ourselves in the dull, gray routine of winter grappling with resolutions, rush hour, and an overabundance of Amazon boxes. Like every other year, January comes as a moment of reckoning for over-eating, over-spending, and over-promising.
The New Year Blues are actually a fairly common thing. While some celebrate the accomplishments of the old year and approach the new one with enthusiasm — others are engulfed by a sense of dread. And when the cycle of anticipation invariably fails to live up to the hype, it can be debilitating. This is perhaps even more prominent in the world of money, investing, and the markets.
As 2020 begins, we close out a decade of low inflation, low interest rates, and historic economic expansion. In the 2010’s, we not only continued to pull away from one of the worst financial crises since the Great Depression — we made economic history. We reached historically low levels of unemployment for African Americans, Hispanic Americans, Asian Americans, and women along with the highest levels of median household income to ever grace the record books. We also achieved the longest consecutive streak of job growth and the lengthiest bull market in history. And we witnessed something most economists said was not possible — the return of American manufacturing jobs.
But as we dip our toe into a new decade, we’re faced with new pressures and the historical precedent of unexpected political and economic events. In 1980, the U.S. started the decade by entering a deep recession triggered by the Iranian Revolution of 1979 and a dramatic surge in oil prices. In 1990, Iraq invaded Kuwait, which triggered the first Gulf War that subsequently crippled consumer confidence, suppressed business spending, and sparked a U.S. recession. In the year 2000, the dot.com bubble burst which precipitated the collapse of internet stocks causing trillions of dollars in market losses. In 2010, the European Debt Crisis got under way which threatened banks around the world and had adverse effects on both global trade and world economic growth.
In the first week of this new year — stocks have been volatile and there has been endless talk of powder kegs and market bubbles. Corporate debt has reached unsustainable levels and the student loan crisis has spiraled out of control. We’re also grappling with a presidential impeachment, a precarious trade truce with China, renewed rocket warnings from North Korea, hypersonic missile threats from Russia, and a highly contentious presidential election. Add the recent threat of retaliation from an incensed Iran for the killing of Qassem Soleimani, and we get a truly unnerving glimpse into global risk.
Are you tired of hearing Happy New Year yet? So, despite our private resolve to drop a pant size and pay down our debt, the tenor of the 2020’s will very much hinge on the state of the world. From the Korean Peninsula, to the South China Sea, to the Middle East, the 2010’s left behind a tinderbox of global flashpoints. And while Christmas is clearly over on Wall Street, the economic hope of the new decade will likely rest in a familiar place —- the safety, security and staying power of holding physical gold.