No V-shaped Recovery
First, please read the Disclaimer.
Initial jobless claims in the US for the 6 weeks to April 25th exceed 30 million.
That will take unemployment above 20%, with total jobs dropping back to levels last seen in 1997, and more job losses still to come.
Employment is the key to economic recovery. While unemployment is high, consumer spending will stay low and the economy will struggle. Companies may receive bailouts and the Fed will keep financial markets awash with liquidity but that does not help falling sales.
Companies are also likely to shelve expansion plans, with employment growth a shadow of its former self.
Some industries may never fully recover:
Retail Shopping Malls
Airlines
Travel & Tourism
Hotels
While others are in for a protracted struggle:
Auto Manufacturers: GM and Fiat-Chrysler.
Household Goods and Housing Construction
Banks
...and Consumer Finance
Be prepared. April employment numbers are going to be ugly. Expect some turbulence.
All production is for the purpose of ultimately satisfying a consumer.
~ John Maynard Keynes (1936)
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Disclaimer
Colin Twiggs is director of The Patient Investor Pty Ltd, an Authorised Representative (no. 1256439) of MoneySherpa Pty Limited which holds Australian Financial Services Licence No. 451289.
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