The election has happened and now the tough part of governing needs to happen, ensuring the economy moves upwards for the greatest number of people. With the election, companies all over the nation will be cost cutting until what was normal has returned.
In an article by Neil Irwin of the New York Times News Service, do not expect a V shaped recovery, it will be a slower recovery, why sectors that in theory should not be much affected by the pandemic at all are showing patterns akin to a severe recession.
There were many companies who kept workers on because of the government help, those programs are ending and the layoffs start. Even in head office, the term is management of companies and enterprises the 3.9% decrease is higher than the 2.4% drop during the 2008 recession.
Compounding the problem is as in all recessions, the shifts that were happening already have been accelerating. This means when the economy does get back to full health, many jobs will no longer exist and many other workers will need to find other types of work. Historically those adjustments take time (one hopes the government in charge is helpful to the shift, rather than expecting people to do it themselves).
Sofia Koropeckj, an economist at Moody’s Analytics expects there to be a steady state but not until 2023 or 2024. It is expected upwards of 5 million people will have troubles because their jobs disappeared or have changed significantly.
An example is Herron Printing & Graphics based in Gaithersburg, Maryland. The company produces a number of items or trinkets companies give out at trade shows, which are presently not being held. The company produces restraurants menus, which have a low demand, because menus are on line. The company produces note pads you would pick up in a hotel, which few are staying at. Business is down 90%. Randy Herron is President of the National Print Owners Association. If they are not printing, then no new software or equipment is needed.
Trucking is a large business employing thousands of workers. The industry is working below February levels with employment down 5% and trucking tonnage down by 9%. The industry is not buying new trucks.
Buying a new vehicle and truck employment levels have changed because more and more people research the vehicles on line first. When they go to a dealership it is for a test drive. The price haggling is done on line, which allows consumers move choice to find alternatives.
In every recession, the recession starts in one sector and then moves outwards. In 2008 the recession was housing prices went down; the 2001 recession was the price of dot.com companies declining. The recession starts in a sector and then rolls into others and millions of people begin to lose their jobs. The challenge for the administration is not to prevent the structural changes, it is to ensure new jobs are being created and the pain is short-lived. The past 2 recessions had jobless recoveries which took years for the process to play out. What will happen now?
Linking to dividend paying stocks, these companies tend to be leaders in their field and from an investment point of view that is great. They are also well and need to do cost cutting which affects people which is not so good. Governments have a role (the idea of Andrew Wang and the $1,000 a month dividend sounds very good to bring the economy back). what will the government do?
There are more questions than answers, till the next time – to raising questions.