All Fueled Up, No Place to Go – August 5, 2020

The Covid-19 pandemic and ensuing lockdowns designed to slow the spread of virus is the direct cause of the steepest recession of the modern era.

Support from the federal government via stimulus checks, generous jobless benefits, paycheck protection loans, and more has eased but not eliminated the economic pain.

• But stimulus has put gas in the tank and has helped fuel a rebound in May and June, though July is more problematic amid the Covid spike.

Gas in the tank

The savings rate hit a record 33.5% in April. Thanks to a jump in spending, the savings rate has slipped but remains at a still-high 19.0% in June (U.S. BEA latest data available; 30-year avg: 6.7%).

Despite the high jobless rate, spendable cash is available, but the transmission mechanism to spend is broken.

• Travel, entertainment, hospitality, energy, and more continue to grapple with the fallout from the pandemic.
• Other industries are operating at partial capacity amid social distancing restrictions and the fear of going in public.

While Congress hopes to pass another stimulus bill, the path of the virus is most likely to dictate the path of the economic recovery.

Investor’s corner

A well-diversified portfolio tailored to your individual goals reduces volatility tied to today’s environment and can help place you on the road to your long-term financial goals.

Created 2020-08-05 17:06:49