Part of our continuing coverage on the economic ramifications of the Pandemic is to sift through the multitude of information out there on everyone else’s behalf and try to have it make sense for the rest of us. In keeping with that, we wanted to discuss the impact of the latest unemployment numbers.
The June unemployment numbers that have recently come out show a large number of jobs added back into the economy. Such an increase in the number of jobs added bolstered the markets and people went into the 4th of July weekend feeling optimistic. All the while reports continue to say, that opening some economies quicker have resulted in spikes in the amount of COVID-19 cases. These increases threaten to put undue pressure on the health systems in those areas and have wider than expected economic impact, as these states must pare back the re-opening, they have already done.
What the June jobs number is void of everyone, is the fact that the data was collected through the middle of the month of June. All things being equal, everyone was hopeful as states were moving through the phases of reopening and people were slowly, but surely going back to work. (or at least some people) Now with some states delaying their reopening plans, we find ourselves in a quandary, as in the second half of the month of June the plans shifted. Those calculations are not in that month’s equation. So, for all intents and purposes the June unemployment figures, are wrong. Which is the reasoning behind the fact that maybe we should look before we leap, once in a while.
There are other issues the numbers do not show from a purely macroeconomic perspective and then when one homes in on it, it is a pure microeconomic perspective as it is directly related to certain industries and sectors. So you see it is not so simple.
Let us face some fact, everyone, some sectors of the economy will take longer to get back to normal than others. Some, will, according to certain pundits possibly never come back. Does that make logical sense? Yes, unfortunately, it does. But while some sectors may never come the way they were or might not actually regain any momentum, we are, after all, the most ingenious species on the planet. We have gotten through catastrophe before and most definitely have dealt with economic issues that have changed the focus of businesses and markets. So, while this may have been due to a virus that spread like wildfire it is not the end of the world, as one would see in the last zombie apocalypse movie.
What is true, unfortunately, everyone is that there are uncertain economic times ahead. Anyone who sits and tells you what sectors will be up and running tomorrow and which ones will take another four months is throwing a dart at a board. They may be right in doing so, based on sheer luck or chance. But, while there are many smart people out there looking at different ways to boost the economy, they are still missing the real key factor. Which is no one knows when the actual full-on pandemic will be over and since that is not set in stone, the situation is fluid at best.
Expecting a quick recovery economically was always a long shot and could create more problems than its worth. Keep in mind those who are in a position to trade financial instruments such as stocks, bonds, mutual funds, index funds, volatility and the like make money out of speculation. So the more they can you all to speculate the more money they will make.
What’s more, is that the media is an accomplice to the great robber barons of our time. They will put out article after article, touting this or that and that is exactly what everyone on the ‘street’ wants everyone else to believe. So, what is one to do? Well let’s all be smart about it, shall we? A virus came along and then we had to take all sorts of steps to stop the tide of medical and health pandemonium. At least that is what we are led to believe right?
So it seems obvious that as some states start and stop their plans to reopen and then tinker as they go with how many people can be where, when, how, and why; that the economic fall out from all of this is indeterminate. So, as an investor, consumer and for everyone else, be guided accordingly. Make sure you understand the facts as they are being laid out. DO NOT BELIEVE EVERYTHING YOU ARE TOLD FROM THE MEDIA. Many media outlets are owned by large conglomerates and huge corporations that have a vested interest in you believing what they want you to believe.
Remember, the economy will recover. It is just a question of how long and to what extent. Will people remain unemployed? Yes, they will. Will some jobs be lost forever. Yes, that is most likely going to happen. Will companies try to have lots of employees be able to telecommute or work from home? Yes, that is happening in a lot of major companies and businesses. So that will have a major impact on residential real estate and the value of living in cities close to corporate hubs as well as the services that are used for commuters. It will also have an impact on the value of commercial office-based real estate.