A summary of financial, economic, and other news
The Standard & Poor’s 500 Index moved higher last week. Company earnings were better than anticipated but remained in negative territory. Nobel-prize winning economist Paul Krugman commented,
“It’s very hard to escape the sense that there’s mania now, that this is a FOMO [fear of missing out] market. When you look at the way that people have piled into the stocks of bankrupt companies…there’s clearly something, a bit of mania going on.”
Here’s what happened last week:
- The pandemic did it. During the second quarter of 2020, U.S. gross domestic product – the value of all goods and services we produced in our country – shrank by one-third (32.9%). The enormous decline was largely caused by coronavirus lockdowns. Hopefully, when the virus is under control, we’ll see productivity improve significantly.
- No agreement. No surprise. Enhanced unemployment benefits ended last week after the White House and Congress failed to reach an agreement about how to support Americans and the economy while the pandemic persists.
- A tale of two recoveries… A new letter has been added to the economic recovery alphabet soup: K. People who can work from home have been inconvenienced by the pandemic, but life has continued much as it was before. People who cannot work from home – often lower-income, working class individuals – have been devastated by the virus. They have been laid off. Some jobs are gone for good.
- Near zero. The Federal Reserve Open Market Committee (FOMC) kept interest rates near zero last week. “Even with the improved economic news in May and June, overall activity remains well below its level before the pandemic, and the contraction in real GDP in the second quarter will likely be the largest on record.”
- Who do you love? The public’s perception of companies in many industries has improved during the pandemic. Three-fourths of the consumers surveyed said that, in general, companies had been more reliable than the federal government in keeping America running during the COVID-19 pandemic and related shutdowns.
- Housing sales were up. After three months of declines, some of existing homes sales up more than 20% in the United States during June. Properties were on the market for about 24 days on average, and first-time home buyers accounted for 35% of sales. Year-over-year sales were down 11.3%.
National Association of Realtors, July 22, 2020
- What should a vaccine cost? Leaders in the race to find a vaccine for Covid-19 are negotiating significantly different pricing structures. One firm is floating a price of $25 to $30 per dose to the U.S. government. Another has suggested $19.50 per dose. Meanwhile, in Europe, a pharmaceutical company inked a deal for its potential vaccine with the Netherlands, Germany, France and Italy for $3 to $4 per dose.
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