It took only five weeks for the U.S. economy to wipe out all the job gains it added over the last 11 years. Combined with the four prior jobless claims reports, the number of Americans who have filed for unemployment over the previous five weeks is 26.45 million. That number exceeds the 22.44 million jobs added to nonfarm payrolls since November 2009, when the U.S. economy began to add jobs back to the economy after the Great Recession.
The reality is that the recent stock market rally could potentially come apart. The S&P 500 Index has rallied from its March 23 lows. And signs of trouble are lurking everywhere as the bear continues to stalk its S&P 500 Index prey. It is time to consider is that bear markets don’t just last a month. They extend over several quarters if not a few years. And they exact repeated and prolonged pain and uncertainty across a wide swathe of investors before they finally end.
Future Wealth’s View
The answer to the bear market question lies in the solution to the root cause of the problem – the virus. With hundreds of millions forced to stay at home to stop the spread of the virus, everyone is searching for safe mechanisms to allow people to return to normal life without sparking a second wave of infections. Of course, having a vaccine would help. But, that may not be available for another 6-12 months. We sincerely hope that no one will be ingesting Lysol as the President has suggested. That man is bordering on insanity.
The real question is – what is the exit strategy from the virus and the stay at home mandate? Realistically, the more likely scenario is – tests become available to the entire population long before the vaccine and those who pass the test get to work on a honor system, while those who fail continue to stay at home. But, will it get the economy humming again?
The challenge is to get the restart right. Few corporations have leaders who have the knowledge to understand that it is just not about recovering the business that was lost but really reinventing the business to adapt to a new world. They may do well to take the time to read “Good to Great” by Jim Collins who highlights that leaders who are self effacing, quiet, reserved and direct their ambitions toward the organizations and its goals, rather than themselves, figure out that progress comes haltingly. The guys on Wall Street may not like that lesson.