Year-End Outlook: Tracking the Post-COVID-19 Economy

Early summer saw widespread concern about a spike in COVID-19 cases in the Sun Belt states. As we argued at the time, this was not a “second wave” but the continued east-to-west movement of the pandemic’s first wave. Premature reopening certainly didn’t help, but lack of adherence to social distancing and other preventive measures were likely the bigger culprit. Throughout the year, we’ve made note of the “reaction function” – the time it takes for a region to experience the illness firsthand, take it seriously, and react accordingly. Southern and western hotspots in the US finally seem to have progressed through these stages.

As of late August, cases in the Sun Belt states are decreasing. Meanwhile, we continue to see more evidence of normalization in economic activity – including regional restaurant activity (takeout or outdoor seating, please) and travel data. Despite repeated delays and an apparent standstill in negotiations for further fiscal support, consumer spending and financial markets on the whole have proven resilient. While fears of the market attempting to force the hand of Congress persist, elevated personal savings in the US could be helping to provide an economic buffer while negotiations for further federal COVID-19 aid spending fail to yield results.

While we expect the recovery to continue, it is likely to follow a slower and more cautious path. Importantly, there remains a massive global effort under way to find a vaccine. Never before has the global scientific and medical community been as singularly focused. The potential for a vaccine sooner rather than later must be factored into one’s outlook.