2021 - A Most Unusual Year
It seems only fitting that on this last week of 2021 we look back. While I generally focus on the future, it sometimes helps to look back to better understand how we got here. This past year was anything but “normal.” Not that there is such a thing as a “normal” year, just that these past couple of years have been historically, and relatively speaking, very unique. I will cover the top two or three events of each month covering the past year. Let’s reminisce together.
- Chaos in Washington – The riot at the Capitol on January 6th started the year on a shaky note putting our notion of American democracy in question. Anger and resentment over the outcome of the election and certification process will simmer all year.
- Crypto milestone – The total value of the entire cryptocurrency market surpassed $1T for the first time as Bitcoin rockets through $37,000. Large institutions and investors begin piling in to hedge against inflation and geopolitical risk. Also… speculation.
- Meme-stock craze – WallStreetBets and their army of day traders take the market by storm, triggering squeezes on heavily shorted stocks like GameStop, AMC, and Bed Bath & Beyond.
- Cold snap – Large swathes of Texas lose power as electricity companies cannot keep up with demand. The decentralized network means providers don’t have an incentive to build reserve capacity. Wholesale prices for electricity reached $9,000 per megawatt hour.
- Global semiconductor shortage – Companies begin warning of a chip shortage across multiple industries. Covid triggered a surge in demand for computers and other electronics as remote work and online learning persist.
- The American Rescue Plan – Congress greenlights President Biden’s $1.9T economic stimulus plan, one of the largest relief packages in U.S. history. Hailed a centerpiece of Biden’s first 100 days, it included $1,400 payments for most Americans, expanded unemployment insurance, and state and local government aid.
- Stuck in Suez – After six long days, tugs were finally able to dislodge the Ever Given, one of the largest container ships, that got stuck in the Suez Canal. A rough estimate showed the blockage cost around $400M an hour, and further weighed on supply chains.
- Timberrr! – Commodity prices, including lumber, saw contracts soar 100%. That had knock-on effects across the economy, like the housing market, with prices surging for real estate nationwide.
- Worker shortage – Job openings soared to a record 9.3M in April as the economy reopened, but 3.5M Americans were still on weekly jobless benefits and more than 9M remained unemployed.
- Masks off – Hopes were high that we’d move on from the pandemic. CDC director Rochelle Walensky declared, “If you are fully vaccinated, you can start doing the things that you had stopped doing because of the pandemic.” The guideline was reversed two months later as Delta was surging across the country.
- Travel comeback – More than 37M Americans hit the road or the air over Memorial Day weekend, up 60% from the previous year. Security lines were stretched at the busiest U.S. airports, and people packed into cars despite skyrocketing gas prices.
- Mandatory vaccination – Vaccine mandates entered everyday vocabulary following updated guidance from the EEOC. It said employers can impose mandatory vaccination requirements to “all employees physically entering the workplace,” with only a few exceptions permitted under the rules.
- Sticker shock – A higher-than-expected inflation print in the U.S. showed prices soaring by 5%, marking the biggest increase since 2008. Fed Chair Jerome Powell stands by his “transitory inflation” statement, pointing to supply-chain disruptions and disregarding burgeoning demand.
- Billionaire space race – Richard Branson, rode the VSS Unity into the lower reaches of space hoping to usher in the age of space tourism. Jeff Bezos’ turn came a week later aboard Blue Origin’s New Shepard rocket.
- Got my stimmy – The latest round of stimulus checks arrived, but you had to be a parent to get one. Your kids also had to be under 18. The expanded child tax credit cost $105B, but expired at the end of this year due to a failure to renew it.
- No more lockdowns – Dr. Anthony Fauci said the U.S. will not lock down again to curb Covid, but “things are going to get worse” as Delta fueled a surge in cases.
- Plan for Afghanistan – Taliban fighters took over the presidential palace in Kabul after a stunning blitz across Afghanistan that saw them seize most of the country in just over one week. The economic impact of the long-running conflict cost the U.S. taxpayer an estimated $2.3T.
- Eviction friction – Ending protections for millions of Americans who have fallen behind on their rent, the U.S. Supreme Court dissolved the pandemic-related federal moratorium on residential evictions.
- Trillion-dollar coin – Ideas got creative as a U.S. debt ceiling deadline loomed in Washington. Tensions among party members over the amount of spending created some theatrics. One of those ideas was a $1T platinum coin, which would be minted and deposited at the Federal Reserve.
- China property crisis – Contagion fears surfaced as China property company Evergrande risked a collapse. The company is one of China’s biggest property developers with more than $300B in total liabilities.
- Fed evolution – Fed Chairman Jerome Powell telegraphs a tapering announcement. At its following meeting, the central bank said it would cut its monthly Treasury purchases by $10B and mortgage-backed securities by $5B, bringing an end to the program by mid-2022.
- Global energy crisis – Energy prices continued to surge to fresh records as renewed fears stoke panic about the worst shortage in decades. India warned it only had four days of coal reserves left, German power plants ran out of fuel, and China purchased coal from Australia despite a bitter rivalry.
- Meet Meta – Facebook CEO Mark Zuckerberg used a keynote address to unveil the social media company’s new corporate identity and vision. He believes the Metaverse is the next chapter of the Internet, where people can interact in immersive 3D and shared digital worlds.
- Santa’s early start – The Port of Los Angeles, one of the busiest ports in the country, began operating 24 hours a day and 7 days a week to ease cargo bottlenecks that led to shortages.
- Over the finish line – President Biden signed the $1T bipartisan infrastructure bill, which finally passed Congress after months of negotiations. In it include money for roads and bridges, rail, water and wastewater infrastructure, public transit, ports, high-speed broadband, lead water pipe removal, and EV charging stations.
- Quarantine cut – The CDC updated recommendations for Covid, shortening isolation restrictions from ten to five days for everyone who tests positive for the virus.
- BBB – Joe Manchin deals a large blow to President Biden’s Build Back Better Plan when he announced he would not support it. Negotiations had been under way for six months, but disagreements mean the bill is likely doomed unless his demands for a substantially smaller, less sweeping bill are met.
It was a tumultuous year in so many ways. From inflation, to insurrection, supply-chain bottlenecks to pent up demand, consumers, employers, employees, and investors were all tested. I’ve highlighted only a small handful of the many events that surprised and shocked us. Perhaps 2022 will be the year we return to normal. Now you know.
Bruce J. Mason, MBA