Every week, the unemployment numbers that get released in Canada and the U.S. continue to show millions of new applications for unemployment, highlighting the economic weakness we all were concerned about, take hold.
With the coronavirus pandemic officially worse than most initially expected in January or February, pessimism seems to remain muted despite unemployment numbers that are absolutely staggering. Unemployment has now reached double digit levels, and is the worst since the 1940s, getting worse each and every week.
A V-shaped recovery is now looking like a highly improbable scenario at this point, in my view. The length and severity of the ultimate employment impact this pandemic will have remains to be seen.
For investors worried about their personal finances, however, this unemployment situation, whether directly or indirectly, will impact long-term investor portfolios in a big way.
The main thesis I want to convey is the idea that this pandemic has simply acted as gasoline would on a fire. Economic instability, which existed prior to the pandemic, was simply accelerated by this unforeseen shock, resulting in additional uncertainty for our global economy.
How markets are structurally affected by this pandemic remains to be seen, but I do think various zombie sectors and companies will eventually be wiped out by this economic mess, making paying attention to how vulnerable one’s investments are to reduced consumer spending and reduced confidence related to employment levels ever more important now.
Invest wisely, my friends.
