COVID-19 stopped the longest expansion since World War II. It was the sharpest recession and a very quick drop even moving 12% to the downside in just one-day (Source: Standard & Poor’s data through August 6, 2020). In hindsight, however, many economists predict that we will also look back at this as the shortest recession since WWII. (Note: I am not necessarily making that claim myself. Only time will tell.)
If you look at the stock-market, the recovery has been interesting. One economist, Keith Prather, describes it as a K-shaped recovery. Huh? … This K Recovery suggests that different industries are moving in completely opposite directions. Some, such as sporting goods, grocers, and consumer staples, are booming and cannot produce their goods fast enough to keep up with demand. Yet, the reverse is also true. Restaurants, movie theaters, air travel, and hospitality, just to name a few, are still suffering. I find it very interesting to be in a recession and see boat, RV, and other recreational vehicle sales surge. Figures from the RV Industry Association show an 11% jump in sales from June of last year to June 2020 and there is more demand than supply. (So, if you’re thinking about selling your boat, RV, or even a bicycle, this summer was a good time!)
Speaking of recreational activities that are surging, my husband and I have enjoyed jigsaw puzzles for quite some time. We have been amazed at how hard they are to find now. We ordered one on Amazon that was shipped to our house from Poland. That same puzzle is currently listed as “out of stock.” Perhaps I’ll include a photo of it on a future newsletter upon completion. It’s a 2,000 piecer so be patient with me!
An update from the Institute for Health Metrics and Evaluation (IHME) is forecasting nearly 300,000 COVID deaths in the US by December 1, 2020. If mask wearing in public increases to 95%, more than 66,000 lives could be saved (according to their estimates). For more interesting predictions and analysis by the IHME, visit: http://www.healthdata.org/covid/updates.
The IHME further predict that 50% of school districts in each state will opt for online instruction ONLY. Locally, I hear Shawnee Mission School District has announced they are doing online learning ONLY. Olathe will start elementary schools as a hybrid model (both in-person and online learning) and Middle and High schools on all virtual learning. Spring Hill is the only district in Johnson County that has announced plans to resume 100% in-person learning after Labor Day. As we prepare to publish this newsletter, we are still waiting for a decision on our largest local school district Blue Valley. It is rumored that Shawnee Mission may change directions to follow suit with what Blue Valley does and it applies pressure to neighboring districts as well. I feel for the parents, educators and students navigating the upcoming school-year. No easy answers there.
So where is the good news?! … Well, it’s probably not in the headlines or on your TV but here are some bright spots:
- 60 economists surveyed by the Wall Street Journal in July 2020 feel we will see a V-shaped recovery. They see many industries on the recovery end of the “V” over the next 8 quarters ahead. (Source: Wall Street Journal survey released July 10, 2020)
- The ISM manufacturing or purchasing managers index (PMI) rose to 54.2 in July 2020. This is the highest reading since March 2019. (Source: https://tradingeconomics.com/united-states/business-confidence) A PMI over 50 represents growth and is an important leading indicator of the health of our economy ahead.
- In July – positive job formation surprise (1.763 million new jobs as opposed to 1.5 million predicted). Also, better than expected unemployment rates – 10.2% actual with 12.2% forecasted back in June. (Sources: Bureau of Labor Statistics through July 2020). This suggests a gradual recovery but at least we’re on the path of recovery.
- Lastly, keep in mind, this is a pandemic-driven recession. It is not caused by a pre-existing economic weakness. In fact, the economy was arguably strong coming into this recession and I think that will help us in coming out of it.
Have a nice weekend and enjoy the cooler-than-usual August weather we’ve been having.