In 1964 Bob Dylan wrote a song “The Times Are a Changin.” It was an anthem for frustrated youth and summed up the anti-establishment feelings of people who wanted America to embrace Civil Rights legislation.
Until now I always wondered what it would be like living in turbulent times. When I think of my naiveté at the beginning of 2020, I am embarrassed.
The pandemic has caused the greatest test since World War II. Because the scale and scope of the economic downturn is so great, decision-makers are deeply uncertain about what will work. The misery of millions of our fellow citizens is heart-wrenching. Airlines, restaurants and retail brick and mortar stores have suffered grievous wounds.
On the other hand, our tech sector and many big businesses are prospering.
The Labor Department reported that for the first time since March 14, weekly initial jobless claims have fallen below 1 million.
The U.S. has recovered about half of the jobs it lost because of pandemic closures. The unemployment rate is down to 10.1%. A year ago that number was 3.5%.
The Commerce Department reported that retail sales in July exceeded February sales, topping the precrisis pace. Consumers boosted spending on electronics, health products and restaurant meals.
The markets have anticipated a rebound. The Standard and Poor’s 500 recently reached 3,380, within a whisker of the Feb. 19 high.
The market darlings are technology stocks. The Nasdaq Composite is up 22.7% year to date, and the Nasdaq 100 is up 27.8% year to date.
The Nasdaq 100 is made up of the largest nonfinancial companies. Six Companies, Apple, Microsoft, Amazon, Alphabet, Facebook and Tesla, now account for almost 50% of the value of the Nasdaq 100 index.
All six of these companies’ stocks have appreciated this year, with gains ranging from 16% (Alphabet) to 274% (Tesla). In the last decade the Nasdaq 100 is up 496%, versus 205% for the S&P 500.
Tech companies have been important participants in promoting rapidly accelerating technological change. The type of change we are experiencing is exponential, not linear. Since 2015 rapid developments in machine-learning algorithms, artificial intelligence, block chain and “smart” technology have spawned major explosions of new technologies and innovations.
Because big tech is unfettered by the costs of raw materials or the burdens of manufacturing, distribution and advertising, their growth rate might be sustainable.
Representative of the change is the resignation of Dhivya Suryadevara, chief financial officer of General Motors to join online billing and payments company Stripe. She left a company that has cast a legendary mark over global commerce for more than a century. By contrast, Stripe was founded just 10 years ago to provide payment infrastructure for the Internet. PayPal, which operates a worldwide payment system, has a market capitalization eight times greater than General Motors.
COVID-19 and technology have been a force for both innovation and disruption. The demise of many famous retail names because of internet shopping reflects the change in buying habits. Twenty-five retailers such as Lord & Taylor, J.C. Penney, and Brooks Brothers have filed for bankruptcy in 2020. By contrast, Amazon is crying all the way to the bank!
While it is true that COVID-19 has affected everyone in some way, evidence to date suggests that Black and Hispanic workers face much more economic and health insecurity from COVID-19 than white workers.
The big tech titans — Amazon, Facebook, Google, Microsoft, Apple, Netflix, etc. — will emerge from the COVID-19 crisis stronger than ever. Stay-at-home workers have increasingly relied upon work tools, video calling, e-commerce and video streaming.
We need to turn our attention to helping small businesses and beleaguered individuals. Otherwise, Katy, bar the door! This southern expression means to watch out; trouble is on the way!
