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Consumer confidence means a lot. People will rush out and do stupid stuff in the beginning after lock down. When cases of Covid spike and people get sick and die, they will stay home. The faster we get this virus under control, the faster our economy will rebound.
No one knows for sure. JP Morgan says 10-12 years. We have one example of unemployment reaching 25%, the great depression and it took 10-15 years. Now we are at 25%. And we are fighting a pandemic at the same time.
Top JPMorgan Investment Officer: It Will Take ’10 to 12 Years’ for U.S. Employment Levels to Return
J.P. Morgan did not say that. This was from a chief investment officer (there are several CIOs belonging to different departments in JPM), who might be reprimanded for mis-representing JPM's official stance.
From the JPM website and pay attention to the bolded text:
"J.P. Morgan Research now expects a double-digit contraction in global growth in the first half, with GDP contractions rolling through the global economy through much of the second quarter, until the outbreak fades. The global economy is likely to experience a historic decline in output in the second quarter. We forecast only the second global contraction since World War II and the eighth global recession in the past century.
J.P. Morgan’s economic forecasts see lasting damage from the COVID-19 shock. A two-quarter GDP contraction is expected in both the U.S. (-10% and -25%) and the Euro Area (-15% and -22%). Our forecast continues to embed an assumption that the virus runs its course by June and that the global economy will rebound in the second half of the year, with U.S. GDP projected to climb to 6% growth (annualized rate) over the final two quarters assuming that social distancing policies are significantly relaxed by mid-year. This leaves the level of U.S. economic activity 10% below the pre-virus baseline. China’s first-quarter growth will experience an unprecedented 41% decline, but is still on track to experience a V-shaped recovery, rebounding by 57% in the second quarter. China’s full-year GDP growth forecast has been lowered to 1.1%, from an initial starting point of 5.9% at the beginning of the year."
Pay attention to the part where JPM said we would rebound starting in June (3 weeks from now) with 6% growth. The media is trying to find anyone who will say shocking things for them to print.
Last edited by Swizzle Stick; 05-12-2020 at 12:24 PM..
Pay attention to the part where JPM said we would rebound starting in June (3 weeks from now) with 6% growth. The media is trying to find anyone who will say shocking things for them to print.
You realize you are quoting an article from March 27th. On March 27th we had just over 1,000 deaths in the USA. Things change quickly you have to quote up to day information. Just a few days later JP Morgan revised down all their numbers and expects Q2 to be down 40%. The info you listed is not longer their expectations.
The pandemic caused the recession. The end of the pandemic will create a recovery. Thus the course of the pandemic determines the time frame of the recession and recovery.
Things aren't going to recover overnight like Trump and many Republicans are claiming but it won't take 5 years either. My guess is we will start seeing a significant turnaround in mid 2021 or early 2022. Yeah, things are going to be really, really bad for the next year or so despite Trump and his economic advisors peddling these fantasies about a return to full employment by July and other nonsense.
Agreed. I support Trump overall but that’s nonsense. I think your analysis is spot on. Many industries won’t return to 2019 levels until at least 2022 though, some 2023, like travel, movie theaters, maybe some sports (2022 full return to normal), etc. Other industries will rebound quickly. As with any crisis some won’t return ever to their previous levels - they were already in decline, like department stores as an example.
It’s going to be a long, slow road ahead I’m afraid. I’m keeping way more money in cash than I ever have before. Still quite a lot is invested and I worry for some of those investments, but I can’t plow into the market with its complete denial of reality and massively overpriced stocks. I put in some cash when the market hit bottom (somehow smart timing there lol more lucky than good I guess).
economy should be back on track by election time if no large recurrence of Covid...
There is currently a large "occurrence" of covid.
You first need Covid to go away for it not to come back and hope that the opening up in many states (which I support) does not cause it to again flare up out of control. We had over 22,000 new cases on May 12th.
We are testing more now so any new flare up will likely make it seem much worse than the the past couple months were. And that will force lots of mostly blue states to fully lock down again.
I am not a democrat but I am also not in denial as to how serious this whole thing is.
9/11 affected mostly just a 2 mi square block area. This affected the entire world. I know the plan for most offices right now is remote work for the rest of the year. All Fortune 500 and publically traded companies already have FT remote workers and this pandemic simply increase the amount of remote workers.
This will be the worst event for NYC, I don't know when NYC will recover it maybe 3-5 years from now. Assuming that a vaccine is out by this time next year. It will take another year for people to get the vaccine before being allowed to return to workplaces. If people don't return to offices next year, a lot of offices will close down. I can see small to medium size companies cancel their leases and go full remote. Workers will leave the area too, no need to pay NYC taxes while they can work in a cheaper home town. This has a devastating effect on the local NYC economy.
The reason why I'm not so pessimistic is that NYC is the epicenter of a lot of sophisticated industries.
You just can't pick up that talent pool and infrastructure and relocate to Birmingham, AL or many other "safe" cities. People with skills don't want to live in podunk nowhere. They might accept Denver or Nashville.
I think by July is pushing it, but it's true there's plenty of pent-up demand. Plenty of people are eager to resume eating out, traveling, attending big events, etc. as soon as it's reasonably safe to do so. And that bodes well in the long run.
I've thought the same thing, and I hope we're right. Travel is what I most miss. Can't wait to be able to go somewhere!
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