Economy Could Take Major Hit To Start 2021 Due To This

No Rent Payments

This current economy is rough for renters and great for single family home buyers. As you can see from the chart below, 14.5 million people either have no or slight confidence that they will have enough for rent next month. This survey was done from mid to late October. Imagine how much worse the data would be if this survey was taken 4 weeks later with COVID-19 worse and restrictions higher.

We Need Benefits To Be Extended

This recession accelerated the growing difference between the haves and have nots. It’s much tougher/impossible for low income people to work from home, while it’s easy for the upper middle class and rich to do so. The government absolutely needs to extend the pandemic benefits because if it doesn’t, it’s estimated that 12 million people could lose them. 

If the government doesn’t proactively extend them, there won’t be benefits through January. Adding benefits in March is too little too late. As people get their jobs back, it would make sense to do another round of checks to make up for the losses this winter.

Merrill Lynch estimates the expiration of federal unemployment insurance programs, PUA and PUEC, alone will be a 1.5% drag on Q1 GDP growth. Economists are trying to figure out whether the slowdown will have more of a drag on Q4 or Q1. It doesn’t matter for traders. We know there is a small window of a couple of months where the pandemic related trends will accelerate before reversing starting in the spring. 

While many wouldn’t go long the work from home stocks, we wouldn’t be surprised if they beat the reopening stocks in the next 6 weeks. It’s a battle because we will get bad news on COVID-19 and shutdowns, but we will get good vaccine news.

It’s pretty obvious to almost everyone that we need the pandemic benefits extended, but the government is dragging its feet. As you can see from the chart above, 68% of Americans stated a stimulus is needed as soon as possible. 11% said it is needed after the inauguration on January 20th. That’s too late.

1 2 3
View single page >> |

Disclaimer: Neither TheoTrade or any of its officers, directors, employees, other personnel, representatives, agents or independent contractors is, in such capacities, a licensed financial adviser, ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.