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89% of Executives Reject the Idea That Companies Exist Solely To Make a Profit

Source: GlobeScan Incorporated

This month marks the 50th anniversary of Milton Friedman’s influential statement that: “There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits.”  

A recent survey, A Test of Corporate Purpose, shows that 89% of corporate executives and 76% of investors now disagree with Friedman’s notion that “the social responsibility of a business is to increase profits.” Last year, the Business Roundtable defined the purpose of a corporation as needing to promote an economy that serves all people, not just shareholders. 

The global pandemic and the Black Lives Matter movement this year have also pushed companies to seek engagement with a wider group of stakeholders. Employees and consumers have been demanding a more socially aware agenda from companies rather than a singular focus on profits.

Commodity Prices See Initial Recovery in 2021

Source: World Bank

The global commodity market saw a surge in prices at the end of 2020 and is predicted to continue recovering in 2021. The World Bank reported a 15% increase in oil prices and a 4.7% increase in non-energy prices (commodities not consumed as a fuel or transformed into another fuel) last month. Food prices surged by 2.6% in December, while metal prices increased by more than 10%. 

Increasing demand and production are contributing to commodity price recovery. For instance, demand for steel and metals rose with the resumption of infrastructure projects across the globe that had been previously disrupted by COVID-19 shutdowns. 

Populations across the world also have relatively more purchasing power after receiving checks from government relief packages. As the economy recovers, investors are optimistic, especially with the vaccines’ potential to change people’s health, mobility and the economy at large.

Racial Wealth Divide Rises in Housing Market—Especially During COVID-19

Source: Brookings Institute

The U.S. racial wealth gap in housing is larger today than it was in 1934, with COVID-19 exacerbating long-existing household financial insecurity. Even when they have similar incomes, Black and Latino families are less likely to purchase a house than white families, according to the Brookings Institution. At the beginning of 2020, 44% of Black families owned their house, compared to 73.7% of white families. 

Racial discrimination in the housing market was outlawed by the Fair Housing Act of 1968, but it continues to prevent people and families of color from becoming homeowners. Brookings Institute states that current homeownership subsidies are the main driver for this racial divide — particularly in mortgage lending. As of 2019, “the median white family has eight times the wealth of the median Black family.” 

Homeownership remains one of the most common ways families can build their wealth in the U.S., especially for middle-class families. To eliminate racial discrimination in the housing market, the government can support first-time homebuyers by enforcing federal tax policies that are more balanced. The new U.S. administration plans to tackle affordable housing and anti-discrimination policies with a $640 billion, 10-year plan.

Business Owners in Sub-Saharan Africa Lose Livelihoods, Despite Tighter COVID-19 Containment

Source: World Bank

Revenue declined for more than 70% of the households that rely on non-farm family businesses in Gabon, South Sudan, Malawi, Uganda, Zambia, Mali and Madagascar, according to surveys conducted in May and June 2020. Kenya experienced the highest job loss rate at 62%, according to the World Bank. In general, COVID-related job losses in sub-Saharan Africa were higher in urban areas and among female workers.

Although COVID-19 cases were not as high in Africa as in other regions of the world, the pandemic has taken a major economic toll on countries in sub-Saharan Africa. These countries experienced a devastation in livelihoods, food security and human capital due to the loss of global demand and local efforts to contain the disease. Food insecurity tripled in Nigeria, Ethiopia, Uganda and Malawi compared to 2019. 

Countries that were hit the hardest economically had significant domestic outbreaks, numerous oil exporters and were dependent on the travel and tourism industry. Economic activity is predicted to rise by 2.7% in 2021 — predominantly driven by export growth — but this could be jeopardized by limited vaccine distribution.

Demand for Precious Metals Is Expected to Drop As Economy Recovers

Source: World Bank, World Gold Council

The value of gold reached an all-time high of $2,067 per ounce in August 2020. At the beginning of the COVID-19 pandemic, gold “benefited from its status as a safe-haven asset and was buoyed by continued monetary easing by major central banks,” according to the World Bank. However, due to some initial signs of economic recovery, the demand for gold has started to decline, with its value seeing a corresponding drop. 

Other precious metals have seen price fluctuations since the start of the pandemic: The cost of silver reached a seven-year high of $29 per ounce in August 2020, but has since declined. In contrast, the cost of platinum dropped in April 2020, but has recovered slightly due to the rise of global auto sales and its use in that sector. 

Although the costs of precious metals dropped at the end of 2020, they have remained higher compared to 2019. Experts anticipate demand for precious metals continuing to decline in 2021 as the economy pursues its recovery. 

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