A client astutely asked what we saw as the “markers” going forward over the next few months. Ordinarily, we might point to traditional economic and financial data (i.e., earnings, GDP growth, interest rates, inflation, etc.). But now, as the US begins re-opening, the metrics that matter in the short-term are the Coronavirus dashboard numbers (new confirmed cases and # tested). Axios If these metrics are relatively positive, from state to state and from community to community, then we expect to see the US economy gradually recover. Long-term, the US only recovers fully when there is widespread effective Coronavirus testing, vaccination and treatment.
The US economy has severely contracted. We expect US economic data for the first, second and third quarter to be negative, perhaps shockingly so. Whether we will see more positive data for the fourth calendar quarter of 2020 will depend almost entirely on whether the re-opening is successful and does not trigger a meaningful Coronavirus resurgence. While everyone acknowledges the need to get back to work, consumers and workers are concerned about trying to move too fast. Washington Post Stock market investors, who tend to look forward, appear to be relatively positive, with the US recovering over half of its 2020 losses to date. Business owners and executives, fearful of damage already done and to come, are less sanguine. Axios
What are the long-term implications for this pandemic and the massive government response? What will change? Some good minds are thinking about these questions:
- The End of Globalization? World trade benefits all and will continue, but the world economy is going to look different. Countries will increasingly think more about protection in the broader sense. Do you want a high percentage of your pharmaceuticals coming from a global competitor? How dependent do you want the key supply chains of your leading companies to be on other economies, friendly or otherwise? New York Times Axios