16 Oct “This, too, shall pass.”
Originally Posted On IG in October, 2020
Back in June, we talked about the pandemic and I said, “This, too, shall pass.” Since then, here are some facts:
2020 U.S. Unemployment Rate
Q1 2020 (5.6%)
Q2 2020 (32.9%)
Q3 2020 ?
Q3 GDP is not out yet, but it is a very important number. I forecast tremendous improvement from the last two quarters. The Wall Street consensus is about 23% positive GDP growth in the 3rd quarter. I’m going to go out on a limb and say we will grow close to 30% in the third quarter.
You may be thinking, What does all this mumbo jumbo really mean? Although COVID-19 is still a clear and present danger to humanity, it will not deter worldwide economic recovery. However, every economy in their respective country will recover differently. Some may experience a V-shape recovery, some may have a U-shape recovery, and others may have a W-shape recovery. The bottom line as I stated before? This, too, shall pass.
There is some good news: we have seen unemployment drop from 14% to 7.9% from April to September. It is expected to stabilize in the 7’s for the next three months. Now, keep in mind, a 6% – 7% unemployment rate is spectacularly healthy for any economy. You don’t want 4% unemployment for the long term, because inflation becomes your worst enemy. A 6% – 7% unemployment rate provides competitive wages, a sustainable labor force, and under-control labor costs for corporations. Lower unemployment than that–although it may sound great–is smoke and mirrors.
Let’s talk about underemployment. In July, the unemployment rate was 10.2%, but the underemployment rate was 13.7%. Underemployment describes people who have lost their jobs, but are employed in a lesser wage than what they are accustomed to based on their experience and training. This is the barometer that people should pay attention to. However, the media does not like to talk about it. The media would rather talk about the unemployment rate.
Let me be the first one to tell you that the underemployment rate is at a very healthy place today. While everyone is more focused on how many jobs have been lost, let’s focus on how many jobs have been gained, and still have the potential to get even better because employees are still not getting the full wage.
I invite you to reflect on what has happened over the last six months in this country. Even after all the turmoil, suffering, natural disasters, and injustices…economically speaking, we are undeniably better. For those who may think this country is not resilient, think again. Don’t ever bet against this country; I promise you will only lose. It is not the politicians who make this country, it is the people who make this country what it is.
I encourage everyone to accept our differences and help each other build a better country and world. The fact that we may come from different backgrounds, cultures, communities, races, religious beliefs and sexual orientations should only strengthen our ability to thrive together. At the end of the day, we are all human. In this country, we are all Americans and I believe that is what matters. Together, as a society, we are making history and getting through one of the toughest times we’ve ever had in 100 years together.