May 18, 2020

Weekly Market Commentary

May 18, 2020

The Markets

 

America is reopening, state by state.

That’s welcome news for many businesses, but we’re far from business as usual.

Some households may be able to sustain or increase consumption because of generous unemployment benefits. The Coronavirus Aid, Relief, and Economic Security (CARES) Act increased unemployment benefits by $600 per week. The intent was to provide Americans, who were out of work because of the pandemic, with income equal to the national average salary of $970 per week.

As it turns out, about 68 percent of those filing for unemployment – teachers, construction workers, medical assistants, food service workers, and others – are receiving more money through unemployment than they did from employers.

An analysis conducted by economists at the University of Chicago, and cited by FiveThirtyEight, found, “…the estimated median replacement rate – the share of a worker’s original weekly salary that is being replaced by unemployment benefits – is 134 percent, or more than one-third above their original wage.”

In recent weeks, the number of unemployed workers has grown to about 36 million, according to CBS News. Unusually high unemployment combined with unusually high unemployment benefits may mean some Americans may have more money to spend than they might have had otherwise. The combination could improve the demand for goods. It has however made it more difficult for employers to persuade employees to return to work!

The goal of many leaders around the world is to minimize infection, minimize death, and minimize economic hardship. It’s a tall order and there is no ‘right’ answer. One thing is clear, though. People who have been on lockdown, no matter which country they reside in, have cabin fever.

In the United States, Buzzfeed and BoredPanda have reported on an abundance of pandemic jokes and memes. Americans have watched Michigan’s Father Tim Pelc use a squirt gun of holy water to bless Easter baskets from a socially safe distance. We’ve also been alerted to the possibility of a baby boom that will yield Quaranteens in 2033 and endless rounds of toilet paper jokes.

Focus On The Positive

“Refuse to throw in the towel. The definition of successful people is simply ordinary people with extraordinary determination.”

-Mary Kay Ash

 

Bill Spalding