Crescent Park & Recreation – Happy Belated Thanksgiving

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Dear Partners & Friends,

We hope you all had a Happy Thanksgiving and spent time with family and friends after missing out on much of the Thanksgiving holiday experience last year.

As we reach the end of November, there continues to be ample discussion on inflation, supply chains, and labor force participation. We thought we would share a few articles of interest on these topics as well as some “useful” facts on the origin of Thanksgiving.

 

I. The Unstoppable Consumer.


Despite the lingering Covid-19 pandemic and rising inflation, consumers continue to spend. In particular, spending on goods is well above pre-pandemic levels, while spending on services remains lower than in Feb- ruary 2020. The combination of strong demand, snarled supply chains, higher prices and an unbalanced labor market is making for an unusual holiday season in which record sales might be accompanied by short- ages and long waits for goods.

 


 

II. COVID Retirement Boom.

The following chart shows the percentage of retirees relative to the total US population since the mid-1990s. You can see a clear increase here as the Baby Boomers started turning 65 and older in 2010. Since then, there has been a steady increase in this percentage. However, in 2020 there was a notable bump in retirees as COVID-19 seems to have motivated a lot of early retirements. The percentage may look small, but this increase represents close to 3 million “excess retirees” above what the prior trend would have predicted. That translates in to meaningful labor force declines.
 
 

 

III. The Influence of the Bigs.

We found the attached chart to be illuminating and a continuation of much of what we witnessed during 2020 with respect to the contribution of the “Magnificent 8” (the “Mag-8”) to broader mar- kets (in terms of market capitalization and valuation). The Mag-8 represent more than 20% of the S&P 500 and, during 2020, these stocks represented a large portion of the S&P 500 gains. This growth has continued in 2021 which can be seen by the chart below which shows the forward P/E ratios of the S&P 500 with, and without, the Mag-8 (the Magnificent 8 consists of Alphabet, Amazon, Apple, Meta (Facebook), Microsoft, Netflix, NVIDIA, and Tesla.) It is increasingly difficult to “keep up” with markets without trafficking in these very large, highly followed, tech giants.
 
 

 

IV. Origins of Thanksgiving.


For those of you not in the US, I thought some facts about how Thanksgiving became a national hol- iday would be helpful. While Autumnal harvests have been a part of agricultural societies through- out history, Thanksgiving became a national US holiday in 1863 at the direction of Abraham Lincoln. In part, the holiday was thought to be initiated as a means to pause the merciless fighting of the Civil War even if just for a few days. In July 1863, more than 50,000 Americans were killed in a single battle, the Battle of Gettysburg, in one of the bloodiest episodes of the US Civil War.
 

 

All the best,
Pete

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