April 27, 2020
“…if consumers remain reluctant to go shopping or visit a restaurant due to lingering Covid-19 fears, then employment is not going to rebound quickly”
People are not rushing to a return to normal. An anticipated unemployment rate of over 20% hints that shopping sprees and sit-down dining will be depressed for some time. But we’ll get by. Our ancestors faced challenges far worse.
Millions of Credit-Card Customers Can’t Pay Their Bills. Lenders Are Bracing for Impact.
“Robert Rodriguez and Migdalia Wharton…have been out of work for more than a month and can’t afford to pay their credit-card bills…the bank told them they could skip their April payments. But they doubt they will have money in May.”
“The Department of Housing and Urban Development is providing immediate relief to renters and homeowners by suspending all foreclosures and evictions until the end of April,” Trump said.
Suspending evictions and foreclosures is a relief measure, but it’s a not long-term strategy. Consumer spending accounts for about 70% of our economic activity. If people can’t pay basic expenses, like rent or mortgage, car payments, credit card debt and the like the entire economy is in danger of collapse.
Maybe COVID-19 is a wake-up call that debt is not the way to enjoy an unaffordable lifestyle.
That’s only if spending, “generally remained unchanged and no significant additional emergency funding was provided.”
They are talking about the difference between the Federal budget and the amount collected monthly from tax revenue to pay for it. We are spending $3.7 Trillion more than we have. That’s the deficit, and Congress usually just adds it to the national debit. It’s much like going on a shopping spree on payday, realizing you can’t pay the bill and putting the difference on a credit card.
Not a good long-term wealth building strategy.
“Quickly if Biden wins, slowly if Trump wins, but taxes have to go up.”
For an objective, non-partisan and easy to understand view on national debt, budgets and deficits visit Committee for a Responsible Federal Budget.
At one time a healthy stock market meant a healthy economy for working Americans. It hasn’t been that way for decades. Instead manipulating balance sheets, laying workers off and closing stores drives stock prices up.
“The extremity of the virus crisis is forcing central banks to push the limits of the possible,” said Tom Orlik, chief economist at Bloomberg Economics
The best indicator of how the U.S. industry is reacting is the rapid drop in the number of oil rigs in operation, which last week fell to a four-year low. Before the coronavirus crisis hit, oil companies ran about 650 rigs in the U.S. By Friday, more than 40% of them had stopped working, with only 378 left.
The oil industry cannot be simply turned on or off. It’s a complex, time consuming and expensive process. When demand comes back expect sticker shock, and not just at the pump. Everything we buy is brought to us by oil products. The price of everything will increase.
Note the concentration, (in blue), of low paid 19th century occupations such as cashiers, salespeople, clerks, and receptionists. Look for these occupations to be the first eliminated or replaced with robots and software.
Trends of the future…
Lessons from the past…
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