Understanding the Post-Pandemic Recovery

Although some sector-specific damage from the pandemic will remain significant, signs of post-crisis growth are appearing across the broader US economy.

  • Market volatility could remain elevated over the near term, but the market is not the economy. Aggregate global fiscal and monetary support in response to the COVID-19 pandemic has been historic. The extent to which public officials and policymakers have moved to protect the global economy in light of the outbreak should not be underestimated.
  • In Europe, “better late than never” consensus around the importance of fiscal initiatives will combine with monetary policy efforts – likely resulting in more positive sentiment about the region’s broader post-crisis recovery.
  • In the US, the sectors that have been most adversely affected by the pandemic – including retail, hospitality, and entertainment – will likely continue to face challenges through the rest of the year, but represent only about 7% of US GDP. While headline risks in these sectors are likely to remain prevalent, less damaged sectors – including financial services, manufacturing, and healthcare – represent a larger share of gross output.
  • In some US states, what is being described as a “second wave” of US cases is likely only a first wave instance of infections in areas that have yet to experience one. What’s more, while increasing case numbers garner headlines, evidence suggests that the majority of COVID-19 cases can be treated at home. We believe that the capacity levels of hospitals nationwide and COVID-19-related fatality rates remain key variables for investors looking to assess the potential for a second wave public health crisis.
This material is provided for informational purposes only and should not be construed as investment advice. There can be no assurance that developments will transpire as forecasted. The analyses and opinions referenced herein represent the subjective views of the speaker(s) as referenced as of June 18, 2020 and are subject to change.

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