Markets were flat last week as Americans held their breath in anticipation of the gradual exit from various “shelter in place” policies across the nation. In many metropolitan and rural areas, retail stores will gradually begin to open, restaurants will once again serve their cuisine at greatly reduced occupancy levels and people in several other fields will work to get the wheels of business turning once again.
The plans for getting the country back to work vary in different regions but all are based on a gradual easing of current restrictions. By approaching the challenge in this fashion, policy makers are able to judge how effective their self-imposed quarantine and subsequent easing has been.
Getting the nation back to work is important. The chart below shows the largest Wall Street firms estimates for growth in 2020 and 2021. In my 30+ years in this business, I have never seen such a major shift in earnings in this short amount of time. Clearly 2020 will be a horrible year for investors, companies and Americans as a whole. But what is amazing is how strongly analysts expect the U.S. economy to bounce back in 2021.
I have been saying for the last few months that before we entered this pandemic, the U.S. economy was the strongest in the world. This puts us in the best possible position to rebound from this crisis. At their annual shareholder meeting (held virtually) Berkshire Hathaway’s Chairman and CEO, Warren Buffet doesn’t know how or when the economy will recover from the coronavirus outbreak shutdown, but he remains optimistic about the long-term future of the United States. “We do not know exactly what happens when you voluntarily shut down a substantial portion of your society,..In the end, the answer is never bet against America,”
The country does need to look for a path back to normalcy. Many families struggle to pay their mortgage or rent and put food on the table. The sooner we can safely and gradually exit this quarantine, the sooner we can find that normalcy.
Sources: Bloomberg, Dorsey Wright & Associates, Inc. and The Wall Street Journal, FactSet. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.
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