Learning to Live with It
COVID-19 may not be going away soon, but that has not prevented the U.S. economy and financial markets from rebounding. Americans are learning to live with COVID. Progress has been incremental, but the nation is on its way to overcoming the biggest challenge we have faced since World War II.
This is true across all levels of society. Overall, Americans have shown a great eagerness to return to work following the spring lockdowns, and precautions to reduce the spread of the virus are becoming second nature. This has allowed the job market to rebound quicker than expected.
The medical community has found better ways to treat the disease, and headway toward a vaccine has exceeded expectations. As a result, a second round of lockdowns, which seemed all but assured just a few months ago, now appears less likely.
The public sector also has adapted to the crisis. The Federal Reserve and Congress implemented “shock and awe” stimulus in March and April to bridge the economy to the other side of the pandemic. We expect more stimulus will be made available, if needed (although political turmoil in Washington D.C. remains a risk in this regard).
Finally, corporate America has found ways to overcome the COVID economy. Last quarter, profits for companies in the S&P 500 were 23% better than Wall Street analysts expected – a reflection of both too much pessimism among investors, as well as the resilience of American businesses. Meanwhile, applications for new small businesses have surged as entrepreneurs look for ways to reinvent themselves and capitalize on the evolving economy.
As Warren Buffett is fond of saying, it has always been a mistake to bet against America over the long term. We believe that to be true today, despite the multitude of challenges facing the country. It maybe along and uneven recovery, but the economy is growing once again. America’s resourcefulness should keep it that way.
To quote Pittsburgh-born actor Jeff Goldblum’s character in the 1993 film Jurassic Park: “Life…finds a way.”