We’re halfway through the year. Amid pandemic, recession, protests and stock market whiplash, what’s next?

While it would be a stretch to view the second quarter from a “glass half-full” perspective, the United States managed to avoid economists’ most dire predictions as the first half of the year comes to a close.

On Tuesday, the last day of the second quarter, the Dow Jones Industrial Average closed with a quarterly gain of close to 18 percent — its best performance since 1987. The S&P 500 was up by almost 20 percent, and the Nasdaq Composite rose by 30 percent, their best quarterly performance since the late 1990s.

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Despite the apparent market confidence, small-business owners and investors alike are facing the second half of 2020 with an uneasy mix of cautious optimism and trepidation. A Southern surge of COVID-19 could erode the gains eked out by the stock market — and force a reprise of the shutdowns that brought households and businesses to the brink of insolvency.

“People were more interested in buying toilet paper and cleaning products than buying bags” after the pandemic hit, said Sherrill Mosee, founder and CEO of MinkeeBlue, a brand of travel and commuting bags. She said her sales plunged by 90 percent when COVID-19 struck. “It was crickets around here.”

Mark Hamrick, senior economic analyst at Bankrate.com, said, “We do believe the worst is past but don’t have a high degree of confidence predicting the behavior of the COVID-19 virus.”

Although metrics on employment, real estate and consumer confidence look better than expected, the nation is by no means out of the woods, said Mark Zandi, chief economist at Moody’s Analytics.

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“The numbers have been a little bit better than anticipated. That just goes to the fact that businesses reopened sooner than expected,” he said. “It kind of pulled forward some of the job growth and the better numbers. I don’t think I take any solace in the better numbers than we’re getting right now.”

Brent Weiss, co-founder and head of planning at the financial planning firm Facet Wealth, said the upheaval of the second quarter made many Americans realize that there were “cracks in the foundation” of their financial stability. “Clients were scared. This was the fastest decline in market history,” he said.

Main Street was similarly whipsawed. “It’s been a whirlwind for small-business owners,” said Holly Wade, director of research and policy analysis for the National Federation of Independent Business.

In a survey, the trade group found that reopening the economy seemed to have a booster effect on sales, with 54 percent reporting either slight or moderate to significant growth in May — but the fragile gains are now in jeopardy. “Over the last week, we’ve seen states start scaling back on their reopening and their phase-ins. So the level of economic uncertainty is still strong,” Wade said. “How states respond to increased cases of COVID-19 is very much up in the air.”

In prepared remarks to the House Financial Services Committee, Federal Reserve Chairman Jerome Powell characterized the question Tuesday as the primary X-factor weighing on the economic outlook. “The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus,” he said.

Powell said the CARES Act had been a crucial lifeline over the past three months. “This direct support is making a critical difference not just in helping families and businesses in a time of need, but also in limiting long-lasting damage to our economy,” he said.

To some, that implies the need for Congress to act again, particularly if states or regions have to pause or reverse their reopenings in the coming quarter.

“They have to come up with another package,” Zandi said. “The principal support to growth has been the business reopenings, but it wouldn’t have been enough without the monetary and fiscal support to jump-start a recovery.”

With many types of consumer loans deferred or in forbearance, putting all of that debt back into play will cut into Americans’ ability to spend, save and invest, Zandi said. “Even if infections don’t intensify much further, without more fiscal support, I think the economy will backslide anyway,” he said.

Experts say that in contrast to the real economy’s volatility, Wall Street’s relative buoyancy is a function of the unprecedented lending and liquidity programs implemented by the Federal Reserve — both in terms of reassuring traders that the central bank will do whatever it takes to keep a public health crisis from metastasizing into a financial crisis and in driving down interest rates to such an extent that investors seeking yield have limited options outside of equities.

“Fundamentally, I think investors need to proceed with caution,” said Sam Stovall, chief investment strategist at CFRA Research. “The number of COVID cases is, indeed, spiking higher, yet the market seems to be ignoring it.”

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Ultimately, the gains need to be backed by earnings fundamentals to be sustainable. “Sentiment needs to be met with the conditions on the ground,” Hamrick said. “People are both betting and hoping that the economy stages a solid recovery.”

That, of course, is a big “if” — even without factoring in a global pandemic that still casts a long shadow over the country.

Zandi said that if market optimism turns out to be unwarranted, a fear response could take over and send everything from stocks to consumer spending tumbling again. “The market feels like it’s anticipating a V-shaped recovery. If investors don’t get that, prices will go down again,” he said. “That just exacerbates the economy’s problems.”

Mosee worries about the ramifications if infections spike and shutdowns are reimposed. “It’s difficult. If the leader of the country isn’t doing what he’s supposed to do, people don’t feel like they have to follow the rules,” she said.

While Mosee got assistance from the Economic Injury Disaster Loan program, she estimates that it could take a full year before her business recovers.

“I won’t see the level I want until probably the third quarter of 2021, just the way things are going with the pandemic and not having a vaccine,” she said.

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