A New Hampshire store requires patrons to wear face masks when shopping
The Markets
On Thursday, the Dow Jones Industrial Average fell by 1,861 points, or 6.9%, to 25,128. This was the index’s worst decline since mid-March, and the fourth worst in history measured in points. The broader S&P 500 Index fell by 188 points, or 5.9%, to 3,002. This morning, both indices have opened strongly positive.
The 10-year Treasury note yielded 0.65% at yesterday’s market close, after the Federal Reserve announced that interest rates are likely to remain low for much longer.
The Economy
Yesterday’s decline in the markets was the worst since the peak of the coronavirus turmoil in March. Investors reacted to a surge in Covid-19 cases as states continue reopening, and to a pessimistic economic report from Federal Reserve chair Jerome Powell.
The Fed’s updated policy statement and economic forecast expects a 6.5% contraction in economic output by the end of the year, and the unemployment rate to end at 9.3%, well above the Fed’s long-run projected rate of 4.1%.
On Thursday, another 1.5 million Americans filed for initial unemployment claims, which was marginally better than expectations. Although new claims have been falling since March, more than 2.2 million applications for unemployment benefits were filed in the last week of May, almost equaling the 2.5 million jobs regained by the economy in the entire month.
Overseas, the United Kingdom reported its GDP fell by more than 20% in April, the largest drop on record. The OECD has warned the UK government that its economy will likely be among the hardest-hit by the pandemic’s recession, along with Spain and Italy. Germany’s industrial production similarly collapsed in April, with some economists marking it as the country’s worst month ever for the economy. The World Bank said the coronavirus pandemic has created the biggest global recession since World War II, and predicted that global GDP will contract 5.2% this year.
COVID-19 Numbers
Globally, across 188 countries, there have been over 7.5 million confirmed cases and over 422,000 deaths. In the US, over 2 million have been infected and nearly 114,000 have died. The US remains an outlier, with one of the highest infection rates per capita.
The Public Health
Researchers around the world are developing more than 135 vaccines against the coronavirus. Vaccines typically require years of research and testing before reaching the clinic, but scientists are racing to produce a safe and effective vaccine by next year.
Here in Oregon, Governor Kate Brown announced a one-week “pause” to the state’s reopening plans, calling for ‘a statewide yellow light’ after 177 new cases of Covid-19 and two deaths were reported on Thursday. The plan halts new applications for reopening in the Portland area, which had been expected to enter the first phase. Public health officials are unable to confirm whether the state has the 600+ contact tracers necessary to continue with the multi-phase reopening plan.
Oregon is one of eleven states (the others are Texas, South Carolina, Utah, Arizona, North Carolina, Arkansas, Alabama, California, Nevada and Florida) that reached its highest seven-day rolling averages of new coronavirus cases on Thursday. Georgia, Florida and Idaho have announced plans to move ahead with reopening, despite experiencing a high number of new coronavirus cases.
At the same time, across much of the United States and Europe, the coronavirus has been spreading less rapidly than many feared. Across the Northeast and Midwest of the US, cases are down more than 50%, and often much more, since early May. Nationwide, weekly deaths have fallen for six weeks in a row. And Europe in general seems to have “turned a corner”, according to a spokesperson at Johns Hopkins University.
Public health experts attribute this good news to two things. One, it appears the virus spreads less easily outdoors than indoors, and higher humidity and warmer weather appear to be helping slow the spread better than initially expected. Two, many people are taking more precautions than they were in February and March. They’re wearing masks, adhering to social distancing guidelines, and being careful with touching potentially contaminated surfaces.
The New Normal
As we return to work, many of us are finding it a much different place than it was before the pandemic erupted. No talking in elevators. Partitions between workstations and desks. Daily health surveys about flu-like symptoms. Hand sanitizer dispensers everywhere.
At Springwater, we are busy preparing a detailed plan for safely opening our Portland office. We will be sharing it with you in the coming days. While we look forward to welcoming our clients, colleagues and friends back to our office, your health – and ours – will be our overriding consideration.
Keep the faith, be safe and stay healthy.
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