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At the end of the last pandemic -- the Spanish Flu of 1918 to 1920 -- the United States experienced what we now know as the Roaring '20s. We can only assume this social/economic shift will happen again. "Once pandemics end, often there is a period in which people seek out extensive social interaction," says sociologist and physician Dr. Nicholas Christakis.
Investors take note: There might be a boom in entertainment spending. Here's why.
People have been saving
During this past year, many Americans have been saving like never before. The U.S. personal savings rate was 32.2% in April 2020, up from 12.7% in March 2020. This happened simultaneously with a decline in consumer spending of 12.6%. But does this increased saving translate to increased spending anytime soon?
When will times be roaring?
Christakis thinks there will be spending along with a return to pre-pandemic life, but not exactly soon. He predicts this will happen not this year, or 2022, or even 2023, but in 2024. This estimate might be a tad conservative. After all, that’s three years from now. A Bloomberg article has a different viewpoint, though: "Theme parks, airlines, and even beer is back." And statistics back this up.
Travel and entertainment stats
Speculators think the first hotels to bounce back will be staycation-friendly ones such as Marriott International (NASDAQ: MAR) and Airbnb (NASDAQ: ABNB). Already this year, Marriott has gained 11%, and Airbnb has a gain of 19%, both outperforming the S&P. Restaurant chains are coming back as well, most notably Cheesecake Factory (NASDAQ: CAKE). Also of note is Six Flags (NYSE: SIX) amusement park, which has experienced a 41% gain so far this year. All these are in-person experiences, without a screen in sight (except for phones, of course).
Expensive housing drives entertainment
Another theory on why we might expect more entertainment spending comes from the British investment magazine MoneyWeek. As housing (and even cars) becomes too expensive to buy, especially for the younger generation, people remain renters. Money saved from not putting a down payment on a house or having a car payment might be spent on "lifestyle experiences."
Even cruising -- an activity that poses a high risk of COVID-19 transmission -- is back this year. Carnival (NYSE: CCL) is slated to resume and is launching its biggest ship ever, one that can hold 5,200 passengers.
The Millionacres bottom line
People can stay locked down for only so long. A combination of the coronavirus naturally subsiding someday and vaccinations that are in place right now should lead to a boom of post-pandemic reveling. The roaring 2020s might not include the Charleston dance, but it might consist of what the Charleston represented: people running wild with new freedoms. If you invest in entertainment, keep an eye out for folks who want to have fun, let loose, and socialize once again.
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