If there is one image that captures the plight of many Americans is lining up for hours in their cars to get free groceries at a local food bank. In San Antonio, Texas the lineup was estimated to be 10,000 people.
If you believe the President who says he is a cheerleader for the economy, he favors a V shaped recovery or a sharp recovery.
According to Eric Reguly if you look at the statistics, things might be different. The US economy has never fully recovered from the 2008 financial crisis. The growth in wages has been flat (more people working but little savings – 40% of Americans are worried about the next $400 expense). On top of that President Trump is trying to dismantle the Affordable Care Act and have an extra 30 million people without health care coverage. In addition, many working have health care coverage tied to their work. If work is shut down, what about their coverage.
The federal government has sent out stimulus money and that has helped. However workers are slowly being called back to work and at least 20 million Americans have lost their jobs and economists predict 40% will be permanent.
A survey by Apartment List, an online rental platform revealed 30% of Americans missed their rents or mortgages in June. That was up 24% from April and on par with the May numbers. Given the federal government has more influence with mortgages than rents, except the rent figure to go up.
In addition, if you consider that lineup of vehicles in San Antonio, most people pay “rent” or installments for their vehicles. If they are missing payments is the car payment far behind. Without a vehicle what do they do?
Linking to dividend paying stocks, you can still be optimistic about a V shaped recovery, but only if the government extends protections or keeps giving money to people and businesses. Some of the payments are scheduled to run out at the end of July. Should the government do more? Whatever the government does or does not do, there will be some companies benefiting from the existing working people or there will be opportunities. It would be easier if there is a V shaped recovery, but it case there is not, which companies are still making money?
There are more questions than answers, till the next time – to raising questions.