Friday, January 15, 2021

My Thoughts On The Second Economic Shutdown

My thoughts on the second economic shutdown, the effects, and the likelihood that it will happen

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Here are my thoughts regarding what’s going on in the economy and what the chances and likelihood of a second shutdown will be. First, the Department of Labor just released their latest weekly unemployment insurance claims and the number was higher than we thought. We thought was it was going to be around 735,000 people, instead it ended up being 778,000 people. This past week marks the second week in a row where unemployment claims have been rising and 778,000 is also the highest week in the last 5 weeks.

The Pandemic Emergency Unemployment Compensation Program which gives an additional 13 weeks of payments if you’ve used all of your available UI benefits, ends on December 26th. And on on December 31st, PUA or The Pandemic Unemployment Assistance program which covered gig workers expires December 31st.

The amount of new cases is rising and the amount of patients in the hospital is at a record high. There are 1,440 minutes in a day. From November 19th to the 24th, we lost one person, every single minute of the day and that’s in the US alone. We’re averaging between 160,000 to 175,000 new cases per day, which is an increase of 43 percent from just two weeks earlier. Close to 13 million people have already been infected and we have lost over 250,000 lives. Understandably, due to all these record breaking numbers people are starting to get worried and there’s talks of a second shutdown.

We just had thanksgiving, that means in the next 2 weeks, we’re going to see a huge spike in more cases which is going to create conversation and more importantly, fear in the equity markets. Be prepared to see some volatility across the stock market, digital currencies, real estate – we are going to see some waves. But, the odds of a large scale, nationwide second shutdown are slim to none and here is exactly why.

It’s important to understand something called State’s Rights. These are “political powers held for the state governments rather than the federal government according to the United States Constitution, reflecting especially the enumerated powers of Congress and the Tenth Amendment.” What this means is that the ultimate decider of which laws get enacted are decided by the state as long as it doesn’t conflict with the US constitution. The reason states rights is important is because it relates to our situation in that it makes it very difficult to pass a law that would require a nationwide stay at home order.

The people who actually decide whether or not we stay at home are local government officials and the state governors that we the people elect and put in office. It’s not so much that the government is inefficient or incompetent because I believe we’re all good and we’re all want the best for our families and our country, we just have different methods for running the country. The issue is that it’s difficult to get everyone to agree on something. If it were up to me, here is how I would do it.

First condition is If all the states agree to it by following the same guidelines laid out by the world health organization. We should wait until new daily cases are less than 1 per 100,000 of people in the population and until less than 3% of people tested, get a positive result. According to health experts, it’s only at those levels when tracing new cases is effective to contain outbreaks. In addition to locking it down, we should pass an economic stimulus for businesses and people for however long it takes us to get down to those numbers.

Positive news: The DOW Jones broke a first time record of hitting 30,000 points. The stocks that were responsible for pushing the dow the most were stocks in the energy, financials, and industrial sectors aka, the value stocks which I invested a lot in over the course of 2020 because I love dividends and passive income.

https://www.dol.gov/ui/data.pdf
https://www.who.int/
https://fred.stlouisfed.org/

*None of this is meant to be construed as investment advice, it’s for entertainment purposes only. Links above include affiliate commission or referrals. I’m part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.

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