Hellish Bad Quarter – Bear Market Starts and Recession and Record Unemployment on the Way

As 2020 began, Democrats were divided, President Trump survived impeachment and the Dow was 500 points from 30000, with unemployment at a historic low – 3.5 percent. From mid-January when the coronavirus impact on China’s economy came into focus, to the end of the quarter when 50 percent of the world’s population was under some form of limited movement, the market entered into bear territory, and the world’s economy plunged into a slowdown at least as large as the 2008 Great Recession.

The Dow fell into a bear market on March 11, made a slight recovery, but ended the quarter down 23 percent (20% drop for bear market). A recession is expected as first quarter GDP collapsed with no, even modest recovery seen starting until late summer (two quarters of negative GDP growth). Unemployment was 10 percent in 2009 (9% in Colorado), and is likely to be at least as high in weeks or faster.

Although Congress has passed three multi-trillion dollar aid packages and the Federal Reserve slashed interest rates and injected trillions into the financial system, there is a strong sense the economic pain will be deeper and longer than what we experienced in the Great Recession.

President Trump now faces a new environment without the benefit of the record Dow and low unemployment. He has substituted a Rose Garden strategy of daily White House briefings for his rallies, but the setting frequently puts him on the defense for the early misstatements and subsequent frequent missteps.

It’s not just the economy that is gridlocked, but the pandemic has also frozen the political process, including how campaigns and primaries are conducted and potentially national conventions. Both major party candidates will face a series of challenges, including a political system struggling to provide a fair and competitive election from Labor Day to November 3, 2020.