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What a Difference a Year Makes

June 02, 2021

What a Difference a Year Makes 

With the economy and markets recovering, it’s seems clear we’re on the other side of this pandemic.  I wrote an article last year on April 8th at a time when things were much less certain.  In fact, I would say there was a greater amount of uncertainty at that time than we’ve seen since the Second World War.

On that day, the S&P 500 closed at 2789, today it’s at 4208.  We now know the bottom was a decline of about 35%.  In fact, it was the fastest 35% decline and recovery in history.  Unemployment has gone from 14.8% to 6.1%, with some business offering hiring bonuses and practically begging their employees to come back to work.  According to reports, some of this reluctance to return is because people have used their time off to pursue new careers.  Right now, in some cases, unemployment benefits provide more than what some workers can make at their old positions, and about half of the states are preparing to cut back on the Federal portion of unemployment to encourage people to go back to work.  I know business owners in Highlands who have told me they can’t find help and there’s at least one small restaurant chain with 15 locations in the greater Orlando area that has 200 unfilled positions.  Their solution…close one day per week.


Meanwhile 50% of adults in the U.S. are fully vaccinated.  As I wrote last year, “we’re going to need to learn to live with or without this virus”.  Thanks to Operation Warp Speed and some incredible scientists, we are now seeing COVID 19 infections plummet and if somewhere between 25 and 100 million people have already had the virus, we’re approaching a level of herd immunity no one expected this time last year.

Wuhan Lab Leak

In addition, in April 2020 I wrote in this blog,

“A week or so later, I began seeing posts on Twitter saying this didn’t come from the wet market but might have come from a lab in Wuhan.  This was backed up online with news articles alleging doctors were suddenly disappearing for speaking out and supposed screen shots of job postings in Wuhan for scientists who would study corona virus’ in bats”. 

Apparently, the Biden Administration now thinks that might be the case, even though much of the media and the “experts”, along with the CCP, have denied this is could have happened.  We’ll see.  I always find it interesting who and what the media, left and right, cares to report and when.

Federal Stimulus

Either way, we are all getting a lesson in Keynesian economics.  The amount of monetary stimulus pumped into this economy is staggering, and it isn’t finished yet.  Demand side stimulus has indeed worked (for now), but at what cost?  What are going to be the longer-term consequences?  The GOP just announced a $928 billion infrastructure counteroffer.  Remember in 2009 when we choked on $780 billion in stimulus that mostly went to the banks.  We really are in uncharted waters and no one really knows how this will end. However, the recovery for now is real and broadening, and this time, the velocity of money (how often and how quickly it changes hands) has accelerated.  This appears to be leading to inflation at present, but some commentators feel we can handle a little inflation and the current surge will cool. 

Broadening Recovery

The run-up in tech stocks has cooled a bit, but large industrials like Boeing, Caterpillar, GM, and others are recovering, and supply chains appear to be getting back online.  Gas prices have risen as the economy re-opens, but crypto’s have fallen substantially from their all-time highs.  Interest rates are still at or near historically low levels which, in addition to a new generation now wanting to get out of the big cities into suburbs and more rural areas, has created a housing shortage.  Another piece to the housing shortage is normally, we need approximately 1.4 million new housing starts per year to keep up with the demand of a growing population.  We didn’t reach that level in any year from 2008 to 2020 leaving a massive gap in houses needed.  Couple that with mortgage rates at or near all-time lows and boom, you have housing prices at all-time highs. 

I guess we’ll eventually see how all this plays out.


Michael P Henderson, CFP® CKA®



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