The Economy Under COVID-19: Notes from the Trenches

There are currently two crises underway simultaneously. The advance of the novel coronavirus is taking a terrible toll in terms of physical and emotional well-being. At the same time, job losses resulting from ‘social distancing’ are sending the economy into a tailspin. To fight on both fronts, governments are advancing rescue packages of never-seen-before dimensions. Every day, the tremendous number of factors in play reconfigure in a new way. These ‘from the trenches’ notes attempt to shed some light along a murky pathway.

The last three weekly initial jobless claims numbers in the U.S. have gone from 282,000 to 3.3 million to 6.6 million. Furthermore, the horrendous increase in the count of people laid off and seeking insurance relief isn’t the whole story. Many companies that are continuing to struggle on are asking their employees to take pay cuts. The economy depends on consumer spending, which has just been gut punched.

The good news: the arrival in New York of the USNS hospital ship Comfort. The bad news: the crowds of people, not all of whom were wearing protective face masks, that congregated to watch it come into port. The Big Apple has since come under tighter lockdown control.

The words ‘social distancing’ notwithstanding, there’s been speculation that ‘stay-at-home’ time may lead to an upsurge in births nine months from now. There are also early warning signs that close-quarters confinement may give a prod to the divorce rate.

Without a significant climb in births, the U.S. is about to join the ‘zero population growth’ club. America’s population growth has been decelerating for years. In the latest annual period for which statistics are available, the year-over-year increase was a mere +0.5%, coming mainly from immigrant arrivals. Immigration, both legal and illegal, and at least for the duration of the coronavirus crisis, is a thing of the past.

There’s another way of viewing where stock market indices presently stand and it’s a little more upbeat than one might expect. In the Great Recession (or Financial Crisis, as its sometimes known), all the major indices experienced trough levels in February 2009. The DJI remains +210% versus its February 2009 level. Its maximum climb was +300%. Therefore, the DJI has retained 70% of its latest 11-year elevation. The S&P 500 is +250% versus +340%, keeping 74% of its ascent. NASDAQ is +460% over +560%, a still-captured rate of 82%. And the TSX is +65% to +110%, keeping 59%.

Read the previous article here: The Economy Under COVID-19: Notes from the Trenches – April 2, 2020.

Alex Carrick is Chief Economist for ConstructConnect. He has delivered presentations throughout North America on the U.S., Canadian and world construction outlooks. Mr. Carrick has been with the company since 1985. Links to his numerous articles are featured on Twitter @ConstructConnx, which has 50,000 followers.