I am definitely suffering from “Cabin Fever”. We are well over a month with extremely limited in person interactions and a drastically altered daily routine. As the weather turns warmer, and yes I realize we did have snow again this week here in New Hampshire, with the grass turning green and starting to grow, with leaves appearing on the early bloomers, it feels like time to get busy. The state of our economy is making most people feel the same way, its time to get busy with our economy too. BUT we have that little thing called Covid-19 that does not want to go away. Let us address the virus first.
Covid-19
According to Reuters, the first confirmed case in the US was January 20th, 2020 in Washington state. As of April 23, there have been over 875,000 confirmed cases and 49,694 deaths in the United States. In New Hampshire there have been 1,670 positive tests and 51 people have died. 218 people have been sick enough to go to the hospital with this virus out of a population of over 1.37 million residents. Less than 2/100ths of 1% (.000159%) of folks living in NH have received treatment in hospitals. At first glance it does not appear to be a big deal but if you are elderly or have some conditions like diabetes, obesity, heart disease then it becomes much more dangerous. If you live in an assisted living facility or some other type of “senior living community”, enough precautions cannot be taken. This pandemic is not over, and even though NH had the highest number of new confirmed cases on April 22 at 99 for the day, it feels like the efforts to “flatten the curve” may have worked to some degree.
The Economy
These efforts, social distancing, closing of nonessential businesses, wearing of masks and isolating at home, may be finally having some effect on slowing the virus but there can be no doubt as to the effect they have had on the economy. In my first writing on the virus from March 11th, I mentioned some industries “will take a hit and have a drop in business; airlines, cruises, convention businesses & theme parks.” Airlines are down 95% in travelers, as of now there are zero cruise ships on the water with passengers on them, most states have a “less than 10 people” rule for groups which has led to business gatherings and conventions to cease and we all know that taking a trip to a theme park is not possible as they are closed (unless you are going to Joe Exotics' old Zoo, The Greater Wynnewood Exotic Animal Park which is open from 9-6). Darwin may have been on to something!
In that first communication I mentioned some “winners”. Zoom went from having maximum monthly users of 10 million to 200 million in March. Netflix added 15.8 million new subscribers in the first quarter with many of those coming in mid-March. Target saw a 275% increase to its online sales in April so far. (Individual companies mentioned does not constitute a recommendation to buy their stock but rather to demonstrate trends that are happening due to the virus and our government actions.) The number of new unemployment claims over the last 5 weeks is over 26 million people.
The Markets
Markets remain very volatile. In March we had multiple days that approached 10% swings up and down, but mostly down. In the last several weeks, we are seeing 500 point moves in the Dow rather than 2,000-point records. Suddenly, 2% daily changes in value feel relatively safe. The market will continue to be volatile. On February 19th, the S&P 500 stock index was at 3386 and on March 23 it closed at 2237. That is a drop of nearly 34% but since then we have recovered some of those losses and are up about 25% off the low to a value of 2797. There are many experts that are suggesting that markets are over valued at this time and we will see more pressure on stocks pushing the prices down from here before a true recovery will happen. The last time the Government took such drastic fiscal and monetary measures was in 2008 and 2009 to help stabilize our economy from the real estate and financial crisis and the market followed that up with the longest bull run in measured history.
Final Thoughts
We need our economy to reopen. We need it emotionally. We need it for businesses, big and small. No one wants to become sick with the virus and when we reopen everything will be different. Handshakes likely will not happen. Handwashing and sanitizing will stick with us. I am sure we will stay a good distance from others when out and about. It will not be like it was right away but with time we will find treatments that minimize the effects and a vaccine to protect us in the first place and then we will see stadiums full of fans watching the big game or favorite concert.
I always joke that I'm invited to parties because I'm so much fun walking around with my “Debt Clock” app on my phone. This will likely be the one thing that has the largest impact on our society for years if not generations to come. As our Government hands out trillions of dollars that we do not have, we are creating a larger and larger pile of “IOU's” that will need to be paid back. We will not have the money, so we will have to borrow more but now the interest rate will have to be higher to attract “investors”. Maybe we should elect a person like Dave Ramsey as President to help get us out of this long-term financial mess.
Stay safe and healthy!