Full Recovery Requires Reopening

October 14, 2020

With the presidential election a few weeks away, prospects for another round of fiscal stimulus seem to be dwindling. The recent death of Justice Ginsburg and the rapidly approaching election have shifted the Senate’s gaze.

Conventional wisdom is worried that a lack of additional stimulus, and the potential for a drawn out and contested election, could impede the economic recovery. While we need to wait for the September data on incomes, through August, the Commerce Department’s measure of personal income was 4.9% higher than in February, as government transfer payments – which the US borrowed from future taxes – more than fully offset declines in wages and salaries. Think about that for a moment. Even with the end of special unemployment bonus payments, there is likely more money in people’s pockets today than there would have been had the pandemic never happened!

Right now, any weakness in the economy is coming from the fact that many sectors (especially service-type activities) remain shut down or lightly used. We doubt a full recovery can happen without a rebound in services. Additional checks can’t change Americans’ wants and desires. Instead, continued recovery is going to require states to push ahead with reopening in a responsible manner. For a self-sustaining recovery to fully catch hold, it is reopening, not additional stimulus that is the key.

Any opinions are those of Randy Hutchisson and not necessarily those of RJFS or Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of available data necessary for making an investment decision and does not constitute a recommendation.