To what kind of world will we recover?
Delve into seven world-shaping megatrends, analyse the data that defines them, and plot their potential impact on individual industries.
Return to globe
Partner content
by UBS
The content in this infographic was relevant when it was published on 18 June 2020.
Current views may differ.
Prior to the Covid-19 recession, the US labour market was already a fragile barbell, with mid-skilled jobs falling as a proportion of overall employment.
Mid-level skill jobs have lost share in the labour market, while low-level jobs have gained
Low-level skill jobs
Middle-level skill jobs
High-level skill jobs
60%
50%
40%
30%
20%
10%
0%
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020
Share of US labour market
Source: Haver, UBS.
The Covid-19 crisis introduced further weaknesses because of its disproportionate impact on service sector jobs due to social distancing. Given the possibility of faster automation plus the global nature of this demand hit, the labour market, and therefore consumer confidence, may not improve very quickly.
If dampened consumer confidence leads to greater saving; corporates will likely move their focus away from raising cash and towards deleveraging.
UBS believes a focus on free cashflow amid higher debt and uncertainty could mean that corporate capital expenditure remains weak, which would have a negative impact on long-term earnings growth expectations.1
Outside the US, central banks’ large quantitative easing programmes have not been able to push real interest rates lower, leaving it up to fiscal policy to buffer against future growth shocks.
But vigorous government spending has been dampened by the fact that it is only partially compensating for a vacuum of spending elsewhere.
Limited policy ammunition risks weak responses to future shocks, which could significantly increase earnings volatility.
Whilst some investors are worried about inflation, UBS believes negative output gaps, weak oil prices, a subdued money multiplier2 and limited policy buffers for the future mean significantly higher disinflationary risks.
Against that backdrop, it should be hard for value stocks to perform strongly for extended periods without a meaningful rise in inflation expectations and commodity prices.3
Sectors in focus
The lower-for-longer backdrop supports demand for yielding investments such as Real Estate.
With lower growth and lower interest rates, profitability in the Banking industry is unlikely to return to pre-Covid-19 levels
Falling discretionary purchases and limited disposable income could hit the General Retail sector
Sources:
1. Haver, UBS
2, 3. MSCI, Datastream, Bloomberg, UBS
We think you'll like this
DISCOVER
More from FT Transact
Can the office make a comeback?
The office sector is struggling post-pandemic with high vacancies and low transaction volumes. Can it recover?
Watch videoby UBS
Will climate change and AI energy needs spark a nuclear power revival?
Interest in nuclear as a low emission, reliable solution to meet growing demand for electricity is sparking support from some governments and driving investment opportunities
Watch video
The rise of anti-obesity drugs could have far-reaching effects
The use of anti-obesity drugs is soaring, and the social and business fallout could be far-reaching. It might even affect a nation’s economic performance.
Watch video
Is shoplifting becoming a threat to the retail industry?
The surge in shoplifting has seen record spending on preventative measures, but how might this be affecting consumers?
Watch videoby UBS
Unlocking the power of the mind through new technologies
Technologies that harness the power of the mind may have the potential to tackle addiction, mental health and mobility conditions, and present investment opportunities.
Watch video
China’s manufacturers are under pressure
China is often regarded as the world’s factory, but factors ranging from demographics to competition from rival hubs are putting the squeeze on China’s manufacturers.
Watch videoby UBS
Building blocks: The investment blueprint for future cities
Spurred by growing populations, new cities are springing up across the globe and public-private financing will be key to their growth
Watch video
The driverless car industry has stalled. Can it get back on track?
The self-driving car industry has stalled, with recent accidents raising concerns about the safety and viability of the technology. Can it get back on track?
Watch videoby UBS
Power surge: The AI chips set to transform our devices and the market
A new generation of AI-powered smartphones and computers is coming and expected to generate investment opportunities as a major new product cycle gets underway.
Watch video
AI deepfakes could sway voters and disrupt elections
Around two billion voters will go to the polls this year, but for those looking to disrupt elections, AI-generated deepfakes could be a potent weapon. Can they be stopped?
Watch videoby UBS
Evolution not revolution: How do we move to an impact economy?
How do economists, corporations and investors shift from an output economy to an impact economy?
Watch videoby UBS
Accelerating trade: Inside China and the Gulf nations’ partnership
The investment opportunities from China and the Gulf's growing trade ties
Watch videoby UBS
Will we grow enough food? – a potential $1.3 trn market opportunity
From vertical farming to seed science: solutions for bridging the potential food supply gap offer investment opportunities.
Watch videoby UBS
Why does the future of transport matter, and why now?
How are net zero ambitions, political forces and traveller demographics shaping the new transportation era?
Watch video
Can ecommerce deliver a long-term boost for air freight?
The pandemic-induced boom in online shopping led to exceptional volumes for air freight operators in 2021, but can ecommerce sustain a steady climb for the air freight sector?
Watch videoby UBS
Alternative Meat: What does the future hold for investors?
Will improved taste and pricing increase investor enthusiasm for alternative meat?
Watch video
Can rapid delivery apps get back on track?
Rapid delivery apps such as Lyft, Just Eat and Deliveroo appear to have hit the buffers. But what’s causing their problems, and what can they do about it?
Watch video
Can an Anglo-French challenger compete with space billionaires?
How an Anglo-French merger aims to compete with the likes of Elon Musk and Jeff Bezos in the burgeoning communication satellite business.
Watch videoby UBS
ESG, data and dialogue: Are you really talking about sustainability?
The corporate sustainability story is one well versed, but how much is ESG spoken about in companies?
Watch video
Breaking into the livestream shopping market
Companies ranging from Amazon to YouTube and Instagram are trying to break into the livestream shopping market. But what’s the best way to do it?
Watch video
0 / 0
FT Transact
FT Channels, a partnership destination that combines impactful and enriching multimedia content to spark curiosity and encourage discovery. Each vertical brings expert insights from the Financial Times and our Partners into the most pressing issues of our time.
FT Transact turns a spotlight on the future of capital, exploring what’s driving transactional transformation - from trends in ecommerce, fintech and ESG investing, to the corporate innovators working to build the future of finance. This multimedia series alternates between independent reporting from FT journalists and expert commentary from UBS