The Ripple Effect of 2020, Looking Ahead
As we muddle along through what is now (thankfully) the home stretch of 2020, we are confronted with a dizzying array of data that is difficult to make heads or tails of for even the most sophisticated economist out there. For example, we have seen the largest drop and largest gain in GDP in the history of the nation all in the span of two quarters. We saw unemployment shoot up to nearly 15% and then settle down to recover by nearly half, leaving us with double the rate of pre-COVID. Lending ground to a halt in April and May, and has now opened up with lenders of all types back in the market looking to lend at historic low rates (how many times have we said “historic low rates” in the last 20 years). But the question that lingers is where do we go from here? It feels pretty obvious that the ripple effects of all that’s happened in the last six months are the equivalent of dropping a boulder in the center of a big lake full of little paper boats. It will take a long time for that ripple to reach the shore. The hospitality industry was closer to the center of the lake, and many of those little paper boats are now on the bottom or filled with water and still slowly sinking. It will likely take years before we see which ones dry out and which ones sink. The little retail boats, many of which were already leaking for some time, are now sinking more quickly and many are headed to the bottom.