The economy is not going to come crashing down because of Covid-19, but the ramifications will be felt for years to come, according to Gerry Frigon, president and chief investment officer at Taylor Frigon Capital Management, an investment management firm based in San Luis Obispo, Calif.    

“This downturn in the economy is not like those in the past: It is self-inflicted rather than caused by economic forces,” Frigon said. “We are squarely in the camp that the cure [shutting businesses] is worse than the disease, but we still believe the economy is not as bad as most people think.”

The problem with perceptions is that “what people see in front of them every day is that everything seems devastated, but the unemployment figures were not as bad as had been predicted,” Frigon added. The massive stimulus packages created by the government were allocated inefficiently, but had a positive effect, he added. “The government needed to step in, but the debate is over whether it needed to take the steps it did.”

Frigon predicted a reduced but still positive economic growth level for the year—possibly 1.5% instead of the 2.5% predicted at the beginning of the year.

“I don’t want to underestimate the negative impact this has had on some people. Those in the lower economic rungs in the United States [and developed countries] and many people in Third World countries have been hard hit, but for most people here, it is just a slight reduction in their standard of living.”

“The economic ramifications of the pandemic are going to be felt for many years to come,” he added. “Advisors need to make their clients aware that they should be making decisions based on the expectation of a lower growth rate for an extended period of time.”

But investing opportunities are present. In fact, Taylor Frigon Capital Management had two of its best months ever in April and May, he said. Any investments that can be made in creating or extending connectivity are primed for growth right now.

The good and the bad in the business world have been accelerated by the pandemic. Those companies that went bankrupt were not in good financial shape before the pandemic, Frigon said, and industries that were primed to grow are growing exponentially now.

“Even in retail, those companies that were preparing for a strong online presence are going to do well,” he added.

At the same time, “it might be decades before we completely understand what’s transpired here and what the consequences will be,” Frigon said. The pandemic “is exacerbating market issues and creating a situation that’s making it difficult to navigate markets on a day-to-day basis.”