Remember in the beginning of the year when everything, economically, seemed great and yet some were saying a recession was coming? Many shook their heads, saying there was no way whatsoever that things were going to slow down. The impossible seemed impossible.
And then COVID-19 struck. All private-sector industries saw job losses. Every. Single. One.
Put simply: No event in American history has wrecked the U.S. economy faster than the pandemic-driven recession.
And now? Some economists are saying that the recession, which officially began in February, is technically over and we’ve moved into recovery or growth. One number they’re looking at is the unemployment rate, which shot up from a 50-year low of 3.5% in February to a staggering 14.7% in April, but has since fallen two consecutive months coming in at 11.1% in June.
The economy also added a record number of jobs in June: 4.8 million.
So why don’t we feel more optimistic? Unemployment is still higher by more than 10 million people from February. Furloughs are turning into permanent job loss. States are pulling back on their reopening plans. Millions of Americans are still filing jobless claims.
And we are all still living with extreme levels of uncertainty.
The only thing that seems certain is that the economy won’t simply go back to where it was. Demand patterns have changed, altering consumer spending. And these patterns will likely continue to change - particularly if fighting COVID-19 proves to be a long, hard trek.
Think about it - in the absence of an effective vaccine, are we really going to gather in close quarters anytime soon? Concerts? Movies? Sporting events? Consumers need to be able to trust that going out to spend money won’t come at the risk of catching Covid-19.
The need to socially distance will not only have lasting effects on where we go and how we spend, but also on how and where we work.
Experts are predicting a shift away from full-time jobs to side hustles and multiple gigs in an economy that relies heavily on the internet.
This reliance on the internet, which favored tech stocks in the first half of the year (the tech-heavy Nasdaq gained 12.1% while the Dow, composed of more traditional blue-chip stocks, lost 9.6%), will likely continue to do so for the remainder of 2020. After all, we’re still working from home, shopping online and avoiding social gatherings.
Of course, venturing a guess as to what will happen going forward is a fool’s errand in this strange new environment.
What can we say with certainty? With investors paying close attention to progress toward a vaccine, and with a presidential election looming (and voting challenges looming per the pandemic), one thing to expect - and brace for - is volatility.
In other words, expect the unexpected.