Markets Resemble 2009 Recovery
On Monday, the stock markets were reminiscent of March 2009, which happed to be right before the S&P’s longest bull run in history according to Mike Wilson of Morgan Stanley.
Wilson says that stocks are rebounding in a similar pattern as they did in 2009. The US was climbing out of a bank-driven financial crisis in March 2009, much like the one we face today due to coronavirus. However, bank stocks are not performing as well as they did in 2009, which is some cause for concern.
Permanent Job Losses
According to research conducted by the University of Chicago, a whopping 42% of those Americans who have been unemployed by the coronavirus will not have jobs to return to when the country fully reopens.
Over the last two months, over 36 million people in the US have been out of work. Businesses that have survived the shutdowns may bring some employees back to their jobs, but many jobs are gone, at least for now.
Research has shown that for every 10 jobs lost due to COVID-19, only 3 jobs have been created. Retailers such as Amazon and Walmart have hired many new workers to handle the increased demand during the coronavirus pandemic, but it’s not enough to offset the losses.
Because the coronavirus pandemic is presumed to be over at some point, employment numbers are expected to rebound. However, according to experts it’s likely to be several years before the labor market fully recovers.
According to National Restaurant Association data, over 100,000 restaurants in the US are expected to remain permanently closed, even after the threat of coronavirus has passed. Independently owned restaurants are often cash-strapped in the best of times, but the pandemic-induced closures will force many into bankruptcy.
After a great rally Monday for the markets, the Dow closed 390 points lower on Tuesday after a report was released casting doubt on a promising coronavirus vaccine candidate. On Monday, preliminary results from a clinical trial of a potential coronavirus vaccine candidate helped rally the market. A report from Boston Globe Media’s STAT news service downplayed Moderna Inc.’s vaccine candidate causing the market to deflate in the final hour of trading.
Executive Order Cuts Regulations
On Tuesday, President Donald Trump signed an executive order to cut regulations that stifle economic recovery. The order instructs federal agencies to suspend, waive, or eliminate any unnecessary regulations that impede the country’s economic recovery.
How Americans Used Their Stimulus Checks
As Americans began to receive their $1,200 stimulus checks, some retailers saw an increase in some specific product categories. Many people needed their stimulus checks to provide essentials for their households and to pay rent and mortgages, but spending on some non-essential items increased at the same time.
Major retailers Walmart, Target, Apple and others reported higher sales in electronics, sporting goods, video games, clothing and toys as stimulus payments arrived. Walmart saw a demand for adult-sized bikes and sewing machines and Apple says it saw an increase in demand for its products across the board. Walmart and Target saw TVs flying off the shelves as stimulus payments arrived. At Best Buy, consumers spent their stimulus checks on computer and gaming equipment.
Research shows that within 10 days of receiving a stimulus check most Americans had spent one-quarter to one-third of it.