What Just Happened To The Economy?

What Just Happened To The Economy?

What happened is the enivitable cycle of the economy has come full circle since 2008, but it’s obviously not for the same reasons.  Regardless, the economy has taken a complete nose dive while unemployment claims have set historical highs … and still counting in the last 45 days. At the end of the day, no one could have predicted it would come this way though.

Global and US Economic Overview

Seriously… what the hell is happening?

As you know, the United States finally reacted to COVID-19 not just emotionally, but most significantly, economically by mid February 2020 when stock markets reported the worst one-week decline since the 2008 crash. This of couse started March off with extremely volatile swings in the global stock markets. By March 9th, the pandemic and the oil price war between Russia and OPEC countries had most global markets reporting severe contractions thus sparking the economy into a future recession. March 9th most significantly recorded the worst drop in stocks, 9%, across Europe and North America since the Great Depression. Wall Street saw it’s worst single-day percentage drop since 1987’s Black Monday.

At this point, one benchmark stock price index has declared a bear market in all of the G7 countries and 14 of the G20 countries. Goldman Sachs warned the US GDP will drop by 29% by the end of 2020’s second quarter.

Unemployement Claims

10 million by the week that ended on March 28th. 6.6 million claims were filed that week ontop of the 3.3. million claims filed the week prior.  This is absolutely unprecidented. Especially given the fact that more jobless claims are expected to pile in over the month of April. February’s unemployment rate was at 3.5%. That jumped up to 10% or more in March. To put this into perspective, the 2008 Great Recession saw only one month of 10% unemployment which was in October of 2010. Note: that was two years AFTER the market collapse.

Source: Politico

U.S. Weekly Initial Jobless Claims (thousands, seasonally adjusted)

Economic Questions

To be honest, my head is swimming with a million questions like:

• how will the economy look like in 3 months, 6 months, 12 months, 18 months?
• what does it mean to go from a healthy, growing economy in January 2020 to an economy with 10%+ unemployment 60 days later?
• where can I find economic statistics to stay updated and informed?
• what do this mean for my family?
• are we at the dawn of a new age – automation?
• etc..

I will be creating blogs expressing my thoughts on these topics and more backed up with data, of course, because I know I’m not the only one with these questions. I hope you will see this as a way to ask questions and share your thoughts.

Stay Proactive with the Economy

We are all seeking ways to find control in this very uncontrolable moment in life. Here is my best advice about how to bring some control and therefore some hope back to you.

You’re probably asking yourself and the professionals and experts you know to help you navigate this tsunami wave. My advice is to start with learning about the major functions of economics. Dive deep into articles, purchase subscriptions to reputable news outlets like The Wall Street Journal, Inman, Washington Post, The New York Times, etc.. This is not a time to feed in the “fake news” media hype. This is time to feed into the ‘educate and build valueable market knowledge’ hype. I promise your finances and family will be in a much better position from learning as much as you can and staying current on the information that is coming out daily.

If you don’t know where to start, start learning about the economic impacts this will have on the industry you work in. Then transition it to the financial market industry. Start learning about stocks, mortgages, bonds, and how those transactions work together. Watching the movie The Big Short will help you learn about the financial functions that caused the 2008 Great Recession. I promise you, there are overlaps of those functions that played out then that are playing out now. (Stay tuned for a blog on this topic as well).

Ultimately, if you want to really know how to stay on top of this then stay proactive and stay informed. I encourage  you to take advantage of this incredible resource called the internet. It’s free, it’s accessible, and you have nothing but time on your hands right now. Use it to your advantage! 🙂

I am happy to answer any questions, concerns, or comments you have you. I will be posting blogs regularly about this. As much as it is to inform you, it’s a great way for me to organize my thoughts. We are in a situation that is very complicated and overwhelming. Let your curiousity take over and just start learning. <3

~Shelby Hoover