Three-Point Thursday

1. Economy - Inflation, inflation, inflation. Many of us cringe when we hear it. Individuals on fixed-incomes may throw the remote at their TV’s as the news mentions it. Given the tight labor market combined with the supply chain issues largely attributable to halted production during the early months of the COVID-19 Pandemic, we’ve seen inflation rise and we appear to be in for periods of continued high, and possibly accelerating rates of inflation in months to come. During a Senate Banking, Housing, and Urban Affairs Committee hearing on the CARES Act at the end of September, Fed Reserve Chairman, Jerome Powell stated he expects inflation to ease eventually, but foresees the current pressures running into 2022. Quick tips to combat or offset inflation: 1. Buy Rather Than Rent 2. Invest in Equities over Debt Securities 3. Prepare for Shortages and Buy Durable Products in advance of needing them.

2. Real Estate – Many assumed mass evictions causing thousands of tenants to be thrown out on the streets would be the consequence of lifting the federal eviction moratorium in August. While we’ve seen a moderate increase in evictions over the last couple of months in the U.S., remaining protections for tenants at the city and state levels have helped keep these increased figures more modest. Evictions rose 8.7% in September compared to August. Additionally, many landlords have stated the mass eviction fears were overblown to begin with and a large portion of landlords have been willing to work with cash-strapped tenants all along. Government rental assistance is still moving slowly and is insufficient in many places. Combine this with courts being backlogged for many months and several just beginning to hear eviction cases, and it tells a story that we are not in the clear yet. Evictions could still spike to levels many once feared. For now, eviction cases are on the rise, but we are certainly not seeing an eviction crisis yet.

3. Banking – The FinTech world is growing. It’s probable we’ll continue to see a consolidation of traditional banks with many small-to-mid-sized banks being acquired or merging with big banks. However, community banks are not all simply going to die off and become obsolete in the near-term. The Pandemic has accelerated many changes and companies who fail to adopt new technologies in an effort to adapt to rapidly shifting market demands will continue being left behind as we have seen. Interestingly, the Pandemic also saw a rise in support for local businesses. Given the meteoric rise in mental illnesses reported with mass shutdowns, social distancing, and a record number of humans quarantining or living in isolation for periods being ascribed by many as causal factors for this increase, our awareness of our need for human connection and a sense of belonging to a community appears to be stronger now than pre-pandemic. Regardless, we will still see FinTech companies acquiring more rigid and less innovative smaller banks, however, the two have proven they can co-exist and can even be complimentary allies. Community banks that implement innovative technologies and understand the need for advanced software, even if it means outsourcing to FinTechs, while possessing a more intimate knowledge of their community’s needs will likely thrive in our ever-increasing tech-driven economy. FinTechs that find ways to avoid being purely transactional over relational and community banks which leverage cutting edge technology to augment their deep relationships they’ve built with their customers will thrive in the long-run.