COVID-19 Town Hall: The economy and stock market as states reopen
KOMU 8's Emily Spain talked with Andrew Zumwalt on Thursday about how the economy is doing now that states are beginning to reopen.
Zumwalt works as an MU assistant extension professor in the department of personal finance.
He talks about the current state of our economy and addresses how some of the first major companies have filed for bankruptcy.
He also discusses what the stock market looks like today after hitting records lows when the pandemic first began in March. Check out his answers below.
Q: As states across the country begin to reopen, have we started to see an affect yet on the overall economy?
"There's always going to be some lag as businesses kind of reopen, and they purchase new inventory, rehire their employees whether they were laid off or furloughed, and make sales. It's going to take some time. There's a great deal of pent up demand for many of the products and services from a great deal of people. But, that may not be true for everyone. There's about 33 million newly unemployed in just the past few months, and that represents a lot of lost demand for products and services that may take a while to return."
Q: We saw one of the first major retailers file for bankruptcy this week, what does that tell us? And, could this be a new pattern?
"Well, everything we're experiencing economically can be summed up in one word - disruption. Certainly, COVID-19 has disrupted so much including our supply chains, which are being twisted and stretched as companies navigate obstacles and to try to deliver their products to the next link in the chain. And, for companies that were teetering on the edge, they are more likely to slip into bankruptcy or just close their doors. And, we should keep in mind that some of what we're seeing is the later chapters of the internet disruption rippling through the economy and kind of supplanting the physical retail operations. So overall, there has been a definite trend toward a hybrid retail experience, which can spell trouble for some retailers and COVID-19 has kind of accelerated those changes."
Q: Back in March, the stock market saw record drops. Where does it stand today?
"If we look at a broad measure of the economy in the S&P 500, we're down about 18% since the peak we had in mid-February. But, really that only tells a part of the story. If we go back to May of 2019, we're virtually unchanged especially we're up when you include the dividends. So, there's kind of two different stories there."
Q: Any advice for people on to handle their investments right now as we're seeing the stock market rebound and economy reopen?
"So, if an investor had a broadly diversified portfolio and held on to their investments through the dip, then you likely rode the market up as it recovered. So, that's the good news. However, we're still heading into an economic recession, and there's going to be likely more volatility as companies continue to tackle the COVID-19 disruptions. So, investors should be prepared to weather more ups and downs as we adjust to this economic uncertainty. You might want to consider talking to a financial professional like a certified financial planner, who can help you navigate through this uncertainty."
To find a certified financial planner near you, Zumwalt recommends checking out this website.