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Two weeks ago, thanks to the novel coronavirus, the nation saw 3.3 million people suddenly added to unemployment rolls. Last week, another 6.6 million people filed for unemployment. The Federal Reserve now projects an eventual virus-related unemployment rate as high as 32% – a positively staggering figure. Is there any hope for a quick recovery from the pandemic and worrisome effects such as ballooning unemployment?
Some want us to believe the answer is “Yes!” The purported saving grace to the economic beating we’re all taking is that the promised recovery would be quick. The economic trajectory would be “V-shaped,” as economists say. A “V-shaped” economic recovery refers to the graphical representation of a sharp downturn followed by a just-as-sharp upturn back to a robust economy. In an economic event like this, the amount of time spent at the bottom is relatively brief.
The “V-shaped” downturn is the best kind to have if you must have one at all. Economic downturns can take the shape of other, more “painful” letters. The “U-shaped” downturn is one example. “U-shaped” downturns suggest a longer period spent at the economic bottom.
The bad news is that economists are now saying the “V-shaped” recovery from the pandemic we’ve all been hoping for is becoming increasingly unlikely. The reason they say it’s unlikely has to do with the anticipated trajectory of the outbreak itself. In their estimation, the coronavirus – and its significant economic implications – could be with us far longer than previously thought.
Pandemic Could Result in “a Double-Dip Recession”
Economists are not health professionals. Nevertheless, they understand the only cure for the pandemic’s severe economic effects is a medical one. Until the outbreak is neutralized somehow, the economic ills will remain.
Observers thought more recently the virus would be contained sometime during the second quarter of this year. That projection led many to conclude the downturn would be followed by a sharp rebound in the third quarter. However, the outbreak continues to worsen and there’s no light at the end of the tunnel medically. Now, professional economists are less optimistic that a hopeful scenario will actually play out.
“We have no certainty the virus will be gone by the end of the second quarter,” Nobel prizewinning economist Joseph Stiglitz recently told Bloomberg. If it “lasts through the summer, then all the effects will be amplified.”
The growing consensus is that recovery from the pandemic will take considerably longer than first imagined. Bloomberg’s Ben Holland writes that “rather than sounding a decisive ‘all clear,’ health authorities seem likely to advocate a gradual return to normal working life.” He suggests so-called social distancing protocols could be with us through the foreseeable future, which could hamper a recovery.
This could be particularly bad news for the retail, hospitality and leisure industries. Citigroup economist Catherine Mann tells Bloomberg, “It takes more time to get ‘back to play’ than to ‘get back to work.’” Mann adds that this reality “underpins concerns for the trajectory for services-dependent advanced economies in the second half of 2020.”
Translation: The economy as whole could struggle for some time to regain its footing.
Compounding the uncertainty are predictions of another outbreak as soon as this fall. Experts claim another novel coronavirus outbreak months from now will not be as disruptive as the current pandemic. They say our ability to deal with a subsequent outbreak will vastly improve by then. Nevertheless, the possibility of continued outbreaks suggests a genuine economic recovery could remain elusive for some time.
On that note, in Holland’s article, Keith Wade, chief economist at Schroder Investment Management, tells Bloomberg we could be looking at “aftershocks following the initial outbreak, with restrictions being re-imposed and lifted so as to manage the capacity of the healthcare system to cope.” As for the consequences to the economy of such an environment? “In economic terms, this would lead to a double-dip recession,” Wade says.
Gold Could be the One Bright Spot in an Otherwise Murky Economic Outlook
Economic effects of the 2008 financial crisis persisted for years. That could well be the case for the economic effects of the novel coronavirus pandemic.
In 2008, the U.S. Federal Reserve introduced a program of quantitative easing (QE) to alleviate that crisis’s effects. This drastic monetary policy measure launched gold and silver on a remarkable run that lasted roughly 2 ½ years. Last week, Goldman Sachs said that an even more robust commitment to QE this time could send gold soaring again.
Is your portfolio ready to benefit from another potential gold surge – and silver surge – as the current financial crisis evolves? If you don’t own any of either, the answer is clearly “No.” But you can do something about that during recovery from the pandemic.
Precious metals offer the potential to stabilize your portfolio and even help it grow during this unprecedented period. Want to learn more? Call award-winning Augusta Precious Metals at 800-700-1008. You’ll have the opportunity to speak with one of our friendly and knowledgeable customer success agents. The Augusta team is well-versed in all the ways the current pandemic could jeopardize your future financial security. And we can also explain how gold potentially could offset the pandemic-related volatility plaguing your retirement portfolio.
Our free, informative guide on retirement protection is available to callers with $100,000 or more in their portfolios. If you qualify, you also can find out how to claim your seat for our free Profit & Protect Web Conference. The host of this eye-opening presentation is Devlyn Steele, Augusta’s senior economic analyst and Harvard Business School member. Mr. Steele, a 36-year veteran of economic analysis, accurately predicted the 2008-2011 gold and silver surge triggered by the financial crisis.
The pandemic’s economic outlook grows less certain by the day. However, many experts say gold could be the asset that leads retirement portfolios out of the economic wilderness. If you’re ready to learn how easy it is to add precious metals to your portfolio and protect your savings during recovery from the pandemic, contact Augusta today.