Identifying Opportunities in Economic and Regulatory Changes

Economic Trends

One economic trend that I identified has happened relatively recently. With the coronavirus causing small businesses across the country to shut down, many people are losing their jobs. I've heard from some that the unemployment rate could be as high as it was during the Great Depression. According to the article I read, the unemployment rate could continue to rise even once the pandemic is over. Since so many people are going to be out of jobs, I think it would be a great opportunity to create some sort of job finding platform similar to Indeed or LinkedIn.

1a) I found this in an article on The Wall Street Journal and it was entitled "Economy Recovering, but Unemployment Likely to Remain High, Trump Advisor Says".

1b) The article states that unemployment currently sits at 14.7%, but could very well "end up with a number north of 20%". This would be the highest unemployment rate since 1948. Since, so many people are going to be looking for jobs, they will need a platform that will aid in their search.

1c) I think the prototypical customer is going to be anyone looking for a job, or looking for a change in scenery.

1d) I think this opportunity would be difficult to exploit, because there are already several platforms that help people look for jobs. I would have to figure out some way to do it better than the other platforms. Maybe I could get deals with companies to display their jobs on my platform exclusively. I think doing this would give me an advantage over other job finding platforms.

1e) I think the thing that helped me identify the opportunity was my involvement on job finding sites like LinkedIn and Indeed. Personally, I have never had any luck finding a job or internship on those sites, and I think a lot of people are probably have a similar problem. Also, given how high unemployment is, many people will be looking for jobs in the not so distant future.

Another economic trend that I found was that home prices are increasing and less people are buying homes. The article I read attributed this trend to the coronavirus, which is understandable since you aren't going to be buying a house if you might get furloughed. Once government restrictions end and people get back to work, they will need someone to give them a mortgage so they can pay for a home that increased in price all of a sudden.

2a) I found this in an article on The Wall Street Journal and it was entitled "U.S Home-Price Growth Accelerated in March".

2b) The article states that the rate at which home prices increase has increased from 4.2% to 4.4% across the country. In some parts of the country, it has increased to 8.2% (Phoenix and Seattle). Before the pandemic, some might have planned on buying a home, but now those plans have changed since home prices dramatically increased. Once the pandemic ends, I believe that people will once again want to buy homes. To combat the rising home prices, they will need someone to finance their purchase, and that is where I come in.

2c) I think the prototypical customer is anyone looking for a new home.

2d) I think this will be a hard opportunity to exploit because many homeowners are going to be loyal to the company that finance their last home. If my idea is going to be successful, I think I would have to target people buying their first home since they are not loyal to any one company yet. Also, I would not be financially successful for a while. The Federal Reserve decreased interest rates to 0%. I would not be financially successful for a while, but if I provide good service to the customers I gain, I would get their business when interest rates increases.

2e) I think one thing that helped me identify this opportunity was my basic understanding of Macroeconomics. I know that low interest rates incentivize people to spend money on big purchases like homes, cars, etc. The article also opened my eyes as to how much the cost of housing has increased in the past couple of months. This opened my eyes to the opportunity at hand. Many people will want to buy homes, and I could be the person to finance them.

Regulatory Changes

The first regulatory change that I identified was that the Federal Reserve decreased interest rates to 0%. The Federal Reserve lowered interest rates in order to lighten the economic hit caused by the pandemic. The article I read claims that these low interest rates are here to stay because unemployment is going to remain high once the pandemic ends. I think this opens up many potential  opportunities for entrepreneurs, but the one that stuck out to me was creating a company that loans people money because people are going want to take advantage of these low interest rates and buy things that they once could not.

3a) I found this in an article in The New York Times and it was entitled "Rock-Bottom Interest Rates May Be Here to Stay"

3b) I think this opportunity exists because of what I learned in Principles of Macroeconomics. Generally, when interest rates are lowered, people are more willing to take out loans because they won't have to pay as much back to the lender. Low interest rates will cause people to go out and get loans to finance some big purchases.

3c) I think everyone in the United States is going to be a prototypical customer because they will all be affected by low interest rates. However, the main people who will be affected are those who are interested in making large purchases (cars, homes, etc.).

3d) Similarly to my second trend, I think this would be a difficult opportunity to exploit. Many people are going to want to stick with the company they have always used to finance their purchases, so I will be relying on people who are not loyal to any particular financial institution. Also, I would not be making any money until interest rates increase. In all, this opportunity would take a lot of dedication because it could be a long time until it becomes profitable.

3e) This is similar to the second opportunity. Since the Federal Reserve lowered interest rates, people are going to want to spend more money on big purchases. In the long-run, this is going to cost consumers less since they have to pay less in interest. While interest rates are low, many people are going to be applying for car loans, home loans, etc. Just because interest rates are low, the price of the home or car is still going to be pretty large and they will need someone to finance it for them.

Another regulatory change that I identified was that some congressmen and congresswomen are proposing that the federal government pay up to 80% of unemployed peoples' old wages. This would be great for those who own businesses or want to start businesses because it means that consumers are going to have more money to spend during this hard time. If this were to pass, I think it would be a great time to start a "One-Stop Shop" that sells everything from home supplies to groceries.

4a) I found this in an article in The New York Times and it was entitled "As Unemployment Soars, Lawmakers Push to Cover Workers' Wages"

4b) I think this opportunity exists because the government is wanting to pay people what they would have been making if they could work. People are now bringing in the money they once did and will spend their money like they once did. They will no longer have to worry about dipping into their savings to buy things, preserve the little unemployment money they bring in, etc. Finally, if there was a place where you could buy everything you need, wouldn't you go there, I know I would.

4c) I think the prototypical customers are those who were able to retain their jobs and those who receive the additional government aid.

4d) Out of all of the opportunities, I think this one would be the easiest to exploit. I think it would be the easiest to exploit because shopping is much easier if you just have to go to one place to buy everything you need. Personally, I hate shopping and I think everyone else feels similar when it comes to spending long days shopping. The only problem I see with this is that there are already stores that do the same thing as what I am proposing. What stops someone from spending their federal aid money at Walmart or Target? I think I would have to start in a tight-knit community where there is not a Walmart or Target. This would help me get a following and then it could be a successful business.

4e) When I read that the federal government was thinking about paying unemployed workers what they would have been paid if they had worked. If this were to pass, consumers would have the money to buy things again. They could go to the store, to the movies, etc. Not everyone will feel comfortable going to places like the movies but everyone has to go to the store. I brought in my hatred for shopping and thought that this would be a great time to open a "One-Stop Shop". You could minimize your time out by buying everything in one place.