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The Great Pandemic Legacy:
A Stronger Global Economy


December 3, 2020


“THE LEGACY OF THE CORONAVIRUS will persist long after the virus itself fades into memory,” says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank.  It has altered the course of economic growth and disrupted the global geopolitical landscape, and its effects could be felt for years to come.


“We believe we are in the early stages of a new, long-term bull market featuring industry growth, stronger capital investment and rising productivity.” —Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank

Perhaps its most profound impact has been to accelerate the pace of global trends that were already underway—working, living and shopping more remotely, for example, and restructuring a globalized economy to one more focused on local supply chains. And despite the real and enormous suffering the pandemic has caused, the Chief Investment Office (CIO) believes the economy that emerges on the other side of the pandemic is likely to be stronger.


A new report, “The Great Pandemic Legacy,” by the CIO, outlines these changes, as well as portfolio considerations to help investors prepare to capture potential opportunities in a post-pandemic economy. This is the tenth and final installment of the “Great” series—CIO reports that since April have tracked the biggest pandemic-related developments and their impact on the economy, the markets, portfolio strategy and asset allocation. Those early days now feel like years ago, rather than mere months. Here’s where we stand now, and why the CIO believes a better future likely awaits.


New patterns for economic growth

“Taken together, the changes wrought by the pandemic suggest a greater long-term commitment to U.S. stocks.” —Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank

As the number of at-home workers escalated from about 5% of the total workforce to nearly half,1 people have discovered that it’s a much more viable option than they expected, notes the report. That trend, along with Americans seeking new ways to entertain themselves at home, has driven a surge in online shopping and in the demand for consumer goods. Another potential legacy of the pandemic is higher labor productivity, according to the report. While half of all job losses had been recovered by September, a much larger share of output was recovered.2


A larger role for policy

Governments worldwide acted swiftly to bolster their economies in the early days of the crisis. The U.S. economy and financial markets have benefited from the Federal Reserve’s low interest rates and other pro-growth strategies, while direct relief to families through the Coronavirus Aid, Relief and Economic Security (CARES) Act was so massive that for the first time ever household income rose rather than fell in a recession, notes the CIO. This explains why retail sales set new records in the third quarter, despite still-high unemployment. Such successes demonstrate the government’s ability to support the economy, especially during crises that force widespread shutdowns. In the short term, they could pave the way for additional rounds of stimulus as the pandemic wears on.


A shifting geopolitical stage

Global opinion on China has soured amid the country’s lack of transparency about the origins of the coronavirus, and its early response to the crisis. U.S.-China relations, already tense, have worsened considerably. This new cold war is playing out most intensely in the battle for new technologies, believes the CIO. Additionally, the U.S. and many European and Asian countries are actively seeking to move production of products closer to home to help protect against future disruptions. Both trends could help support growth in U.S. technology and other innovative industries.


What investors should consider

“Taken together, the changes wrought by the pandemic suggest a greater long-term commitment to U.S. stocks,” says Hyzy. While the pandemic’s still-uncertain future, geopolitical tensions and other challenges will likely cause ongoing periods of volatility, “We believe we are in the early stages of a new, long-term bull market featuring industry growth, stronger capital investment and rising productivity.”


For more on how the pandemic has changed the U.S. and global economic outlook for the future, read “The Great Pandemic Legacy.”


1 Federal Reserve Board of Atlanta website, May 28, 2020.

2 Bureau of Labor Statistics, August 2020.


Information is as of 11/18/2020.


Opinions are those of the author(s) and are subject to change.


Investing involves risk, including the possible loss of principal.


Past performance is no guarantee of future results.


The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” or “Merrill”), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation.


Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.


Equity securities are subject to stock market fluctuations that occur in response to economic and business developments.


Investments in foreign securities (including ADRs) involve special risks, including foreign currency risk and the possibility of substantial volatility due to adverse political, economic or other developments. These risks are magnified for investments made in emerging markets.


Investments in a certain industry or sector may pose additional risk due to lack of diversification and sector concentration.

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