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Federal Reserve Casts Pall over Pandemic Recovery

Posted By Isaac Nuriani |

President Trump announced suggested guidelines for states anxious to reopen for business. Immediately, the governors of Georgia, South Carolina, Tennessee and Texas began planning the phased reopening of businesses in their states.

There are strong divisions throughout the country on the issue of reopening. On one side are those who think it’s high time to work toward ending the shutdown. On the other side are those who believe lockdowns, stay-at-home orders and similar protocols should remain in place.

The big question for all of us, though, is whether these moves toward reopening the nation are a reliable sign that the worst of the outbreak is behind us. One of the suggested criteria for reopening detailed by President Trump is a decline in COVID-19 cases. However, it’s unclear if states are seeing an actual decline in cases, including states committed to reopening in the near future.

In truth, leaders of the world’s most prominent public health agencies say we have a long way to go before the virus is contained. World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus flatly said last Monday “the worst is yet ahead of us.” And the Centers for Disease Control and Prevention (CDC) director Robert Redfield referred to an ominous projected “second wave” of the virus that could reemerge later this year. Redfield warned last Tuesday that “there’s a possibility that the assault of the virus on our nation next winter will actually be even more difficult than the one we just went through.”

As for the country’s economic prospects over the foreseeable future, the Federal Reserve’s outlook is about as gloomy. In separate interviews with Yahoo Finance, three Fed presidents each said the country could be a long way from recovery. What cues, if any, should retirement savers take from the Fed’s somber assessment of a recovery in the near term?


Fed President: Depression Still Possible Pandemic Consequence

CNBC recently asked billionaire entrepreneur Mark Cuban about the health of financial markets. He was pessimistic. Referring to those who’ve been jumping back into risk assets, Cuban warned, “I just don’t think they are really factoring in what we are going to see on the other side.”

Key Fed officials seem to agree. Robert Kaplan, Federal Reserve Bank of Dallas president, on Bloomberg TV, reiterated the opinion expressed by Cuban. “It may take a while, and I mean into 2021, for the consumer to get his or her footing back.” He expressed particular concern about the energy sector in light of the unprecedented oil price collapse. The Fed president told Bloomberg he expects “a number” of bankruptcies in that now-distressed industry. In his view, exceptional measures may be in order to keep the oil industry functioning.

Kaplan wasn’t the only Federal Reserve president to speak publicly last week about the nation’s economic outlook. John Williams echoed Kaplan’s sentiments in a webinar hosted by the Economic Club of New York. “Even as the pandemic passes through, and as the economy comes back, I expect demand to be weak,” Williams said. He added that “this is a situation where I think the economy is going to be underperforming for some time.”

St. Louis Fed President James Bullard also shared a similar opinion last Thursday in a U.S. Chamber of Commerce online forum. In one sense, he was more positive than either Kaplan or Williams about the possibility of a relatively fast recovery. At the same time, he was not shy about hedging that upbeat view with his own dire warning. “You are taking a lot of downside risk with the U.S. economy including depression as a possible outcome,” he said.

There you have it, right from the Federal Reserve. We could have a sharp recovery – or a depression.


Savers Can Expect “Strong Monetary Support” from the Fed

It’s certainly disconcerting that any Federal Reserve president believes a depression could be an outcome of the current financial crisis.

Whether such a catastrophic eventuality comes to pass remains to be seen, of course. One thing does seem fairly certain. Any economic recovery coming our way will take place over an extended period. This could mean retirement portfolios will be slogging through the mud for quite a while.

So how should savers respond to the worrisome and uncertain outlook? Something John Williams said during his appearance at the Economic Club could provide us with a nugget of valuable information. Among his comments, Williams suggested the need for “strong monetary support – fiscal policy support, as well – to get our economy back to full strength over the next couple years.” Careful listeners might interpret that statement to mean additional super-accommodative policy measures are forthcoming from the central bank. History tells us that drastic quantitative easing (QE) can exert especially good influence over one particular asset: gold.

During the Great Recession – from 2008 to 2011 – gold climbed more than 160%, fueled by two rounds of Fed QE. Goldman Sachs is just one firm suggesting “unlimited QE” today could cue a similarly epic run by gold this year.

If you don’t own gold presently, now is a great time to call award-winning Augusta Precious Metals at 800-700-1008. One of Augusta’s many unique offerings is the knowledgeable and experienced team of economic analysts who work here. When you contact Augusta, you won’t find yourself dealing with the stereotypical salesperson. You’ll speak with genuine gold and silver buying experts. These professionals are well-versed in the multitude of factors that can affect both the economy and precious metals.

Callers with retirement portfolios of $100,000 or more will receive our free guide on retirement protection. That’s not all. Those same callers are eligible to attend Augusta’s Profit & Protect Web Conference. This is a live presentation that exposes the many pitfalls on the road to financial independence. Your webinar host is Devlyn Steele, Augusta’s senior economic analyst and Harvard Business School Analytics Program member. In this web conference, Mr. Steele shares key strategies that can help your portfolio thrive during even the most challenging environments. Including the one we’re all living through right now.

Dreary economic forecasts are unpleasant. But they don’t have to spell eventual doom for your retirement portfolio. Augusta’s gold and silver buying experts can help you work toward portfolio security and peace of mind during this unprecedented period in history. We look forward to hearing from you.

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