Digital Information Thrives
Many investors are worried about the de-globalization of the world. While many metrics do suggest that global production and trade of tangible items are slowing, the trade of digital information and code (bits) is showing no signs of cooling down.​​​​​

Chart for AOM​​

  • With the imposition of tariffs on various products and the resulting economic uncertainty, shipments of physical goods have tapered off. North American freight volumes (shown above) are now declining, following robust growth after the corporate tax cut that went into effect in 2018. By contrast, much of the digital world continues to enjoy strong growth. Indeed, U.S. software investment has continued to grow at a strong double-digit pace in real terms.

  • Tariffs have been focused on physical goods, such as industrial equipment and agricultural products, but the digital economy has avoided the spotlight. Part of the reason is bits are harder to tax than boxes of goods. Another factor is digital economies have already been segregated for some time with little overlap between China’s internet giants and those of the U.S.

  • Going forward, investors should consider the possibility of a bifurcation in the economy where growth may accrue to digital industries, such as new media, cloud computing and enterprise software, while traditional industries that are dependent on physical goods and global supply chains may languish.



The views expressed are the views of Fred Alger Management, Inc. as of September 2019. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security or any funds managed by Fred Alger Management, Inc. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.​

This material must be accompanied by the most recent fund fact sheet(s) if used in connection with the sale of mutual fund shares.

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