The economic stories that shaped 2020
A trip down memory lane
2020 started out as the 11th year of the longest economic expansion since World War II. But things took a turn very quick as the Pandemic shocked the world and shut down businesses with no signs of reopening anytime soon. Even through all the uncertainty the stock market chugged along strong as ever reaching a previous all time high 2 months after the first case in February 19th. Once businesses were shut down and the economy froze that’s when stocks took the big hit with the S&P 500 falling 35% in just six weeks. How did the U.S. government react? Well in 2020 the government spent $2.6 Trillion in Covid-19 relief and even more through 2021.
On Things Have Changed we covered how the BEACH industry was hit hard. Booking, Entertainment, Airlines, Cruises & Casinos, and Hotels & Resorts all struggled to keep afloat with no cash flow to pay overhead. In just one month these companies saw $332 Billion wiped from their values. So what did they do? They borrowed loads of money to keep the lights on and not have to file bankruptcy.
With the combination of lending companies cash, stimulating the economy through massive spending, and cutting interest rates to near zero the S&P 500 still ended up in the green 15% by year end. Wow, talk about looking at the bright side of things.
Even though the market was and still is on fire, this isn’t representative of how our economy is doing when looking at all income level earners. At the worst unemployment hit 14.7% and now it lays at 6.2%, double what it was before the pandemic. Looking further into the make up of these figures we’ll find that races see a different story. For example while unemployment lies at 6% for whites, the black and hispanic unemployment rate lay above 9% still. A disparity that isn’t that unfamiliar when looking at historical data. Economist also have found that the lowest paid groups (service industry) have been struggling the most.
So before we look at the stock market and overall unemployment, it’s important to consider all represented parties of the working class to understand how healthy our economy really is.