The GDP Hit, Unemployment, and a Look Ahead

U.S. GDP fell at a 4.8% annual rate in Q1, posting its first quarterly drop in over half a decade and it’s worst quarterly drop since the financial crisis. Consumer spending, the main (re: ~70%) contributor to GDP, was the primary culprit after suffering its worst nosedive since 1980, and plunging business investment was the runner up. We’re already bracing ourselves for the Q2 print, with economists projecting a 30%+ annual decline. There’s been a lot of talk about Q3 as a turning point, but will the ghosts of infection risk and (perhaps more importantly) lost wages continue to haunt us long after the primary threat has lifted? Unemployment is at record highs and approaching 20% of the nation’s labor force, but how much of that population has seen their take-home pay jump thanks to the $600 boost to unemployment insurance? And did someone forget to tell the S&P 500^® Index that there’s a pandemic going on? Despite the unprecedented blow to the economy, April saw the index clinch its best month since 1987—thank you tech stocks! But is it growing overextended? Meanwhile, debate continues about how, where, and when the economy should start to reopen, and what should change in the aftermath of the pandemic. With COVID-19 now the leading average daily cause of death in the U.S., opinions are plentiful. One thing’s for sure, we’ll be opting for head nods and elbow bumps over handshakes for the next few months…