Get Ready For Turbulence That Will Impact Your Job, The Economy, Stock Market And The U.S.
Get ready for some turbulence. A confluence of events are coming together, which will make things tougher for people. It will impact your job, the economy and stock market.
Resurgence of Covid-19
Last week, it was reported that Europe is experiencing a second wave of Covid-19. European countries are closing down their economies, ordering businesses to shut down and requiring people to stay indoors, calling for curfews and states of emergencies. This means that their respective economies will slow down or come to a crawl. This will cause more layoffs to occur. Consequently, consumers will spend less to conserve resources, which will result in businesses suffering from a lack of revenue and will have no choice other than to downsize workers. As more people are thrown out of work, they’ll also spend less-causing a downward economic spiral.
Although we’ve hoped to get past the pandemic, danger still lurks around the corner and there could be a second and third wave of the outbreak. Optimistically, we hoped that we’d miraculously muddle through this disease without incurring further casualties and deaths. It feels like this was a foolhardy dream. There’s fear that what happened overseas may occur in the United States too. After eight months of shutdowns, this is not what we want to hear. Just when we thought we were almost out of it, we’re drawn back in again.
The popular media opinion was that former Vice President Joe Biden would handily win the presidential election. The recent stock market volatility suggests that may not be the case. The sudden cascade of stock prices seems to indicate that either Trump will be reelected or there will be a contested election.
If we don’t have a clear winner, things could get ugly. Since we’ve witnessed months of mayhem, riots and civil unrest in large U.S. cities, it’s reasonable to conclude that we’ll have a frightening level of violence, destruction and unrest after the election. Both sides may claim victory, which could lead to actions that we don’t want to even consider, as it would rip apart the country.
Violence and mayhem
On Tuesday, a knife-wielding man was shot by police officers in Philadelphia. The city erupted with looting and people broke into stores stealing goods. This-and past riots-may indicate a precursor of what may happen after the election. This may be the first time in modern history that a winner most likely won’t be announced on Nov. 3. You can sense the tension over what will happen and how ugly things may get.
The holiday season is on the near horizon. Usually, this is a joyous time. People are happier. The mood generally improves. We smile and nod to people on the streets. Plans are made for parties, get-togethers with friends, company-sponsored holiday events and traveling to see relatives that you haven’t been with for a while. That’s not going to happen this year.
For job seekers, the mood is dour. Concerns over the resurgence of the disease, along with the uncertainty of the direction the country will take (depending upon who is the president), plus the typical slowdown that accompanies this season and a deterioration in the stock market (due to lackluster earnings) will contribute toward forcing companies to hold off on hiring and wait things out until there’s more clarity.
For the millions of Americans who have lost their jobs or are worried about the safety of their jobs, they’ll curtail expenditures and hold off on purchasing items. To make matters worse, Congress couldn’t come to an agreement over a second stimulus package. The last multitrillion dollar round helped invigorate the economy, stock market and led to the creation of new jobs and companies bringing back furloughed workers. In the absence of a financial rescue plan, people may not be able to pay their rent or mortgage payments and have little leftover for gifts.
The wealth effect in reverse
The stock market, until recently, seemed to have miraculously rebounded and regained all of the losses from the pandemic lows and remarkably reached new highs. The tech sector, including Amazon, Apple, Google, Microsoft, Zoom, Facebook and other work-from-home stocks, have been on fire.
Recent trading activity reflects the bloom is off the rose for the stock market. Earnings are not strong enough to support their lofty prices. There has been much written about wealth inequality, as folks like Amazon CEO Jeff Bezos made billions more during the pandemic, while the average person is just trying to hang on.
The wealth effect serves a purpose. For the people who own stocks-which include everyday people who have 401(k), children’s college tuitions and corporate retirement plans-along with the roughly 10% of Americans who own both securities and real estate, the increase in value made them feel more confident. This led to spending more money, which stimulates the economy and ultimately creates new jobs, as companies benefit from the new business. Unfortunately, as stocks fall or maybe even crash, people will substantially curtail their spending habits. This will slowdown the economy, make it difficult for businesses to survive and the cycle of layoffs will continue.
No smooth sailing
Rising rates of coronavirus, increases of jobless claims and general uncertainty will keep people from traveling. Sectors that have been beaten up badly, such as airlines, cruise liners, resorts, hotels, restaurants and leisure, won’t see any help anytime soon. They’ll continue lacking customers and passengers, which means little-if any-revenue, no profits and lots of losses.
Other corporations will pull back on their activities too. They’ll hold off on hiring, enact layoffs and cut costs. When this happens, other companies will follow suit and do the same thing. It will be easy for executives to say, “Let’s just wait for the elections to be over.” Then, when it’s over, they’ll add, “We might as well wait until the New Year before we make any hasty decisions.” This means we’ll be in a long period in which everything grinds to a halt.
Hang in there
This dire situation won’t last forever. The pendulum always swings to excess. Soon, it will turn toward the positive side. Eventually, we’ll have a vaccine or figure out how to minimize the impact of the outbreak. If not, we’ll learn to live and cope with Covid-19.
As a nation, we have fought England, the mightiest empire at the time, and won our independence. We’ve fought a Civil War, World War I and II. We endured the Great Depression, Sept. 11 and a host of other challenges. We’ll prevail now too. It may take some time to fly through this turbulence, but it will happen. Stay strong and hang in there until this happens.
Originally published at https://www.forbes.com.