13 April 2020

1) As the administration considers efforts to restart the economy, economist are considering what a recovery will look like. Although there are widely differing opinions, most consider it will be a long slow process. While it was a great shock with the sudden stopping of businesses followed by the sudden massive unemployment, few consider that there will be a quick ‘snap back’ like with a light switch being snapped back on. The shutdown is causing fundamental shifts in the social-economic system. People’s shopping and ‘going-out’ habits such as restaurants, movies and sporting events is changing, which is also a change in spending habits. People are more reluctant to travel in high density such as airliners or cruise ships. Many small businesses will not survive this recession, and with half the businesses in America classed as small, there will be a significant change in the business environment, plus it will be a long time to reabsorb the massive unemployed, since automation will move in to fill the void. Finally, America’s economy is subject to being pulled down by the world economies, which few are expecting a strong comeback from, since so many were already weak before the coronavirus.

2) Consumer prices fell 0.4% in March, the largest monthly decline in five years. This is from the cost of things like traveling, gasoline, airfares and hotel rooms plunging. Energy cost is down 5.8% with gasoline prices down 10.5%. Food prices did continue rising. There are fears that the GDP will drop 30% or more adding to the economic bad news.

3) The wild gyrations of the stock market is leaving investors confused over what is happening. Stocks are going up when the future is filled with doubts and uncertainty, not a time when investors buy equities. The unemployment is quickly approaching, and may surpass 15% amidst fears of a huge economic contraction with a long term recession- a time when normally only fools would buy into the markets.

4) Stock market closings for – 10 APR 20:

Markets closed for Good Friday

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