{"id":9999,"date":"2020-04-17T09:00:05","date_gmt":"2020-04-17T14:00:05","guid":{"rendered":"http:\/\/blog.uwsp.edu\/cps\/?p=9999"},"modified":"2020-06-03T10:43:46","modified_gmt":"2020-06-03T15:43:46","slug":"the-coronavirus-why-the-u-s-economy-will-never-be-the-same-part-2-what-happened-a-review-of-the-stock-market","status":"publish","type":"post","link":"https:\/\/blog.uwsp.edu\/cps\/2020\/04\/17\/the-coronavirus-why-the-u-s-economy-will-never-be-the-same-part-2-what-happened-a-review-of-the-stock-market\/","title":{"rendered":"The Coronavirus \u2013 Why the U.S. Economy Will Never be the Same Part 2: What Happened \u2013 A Review of the Stock Market"},"content":{"rendered":"\n

The stock market is not the economy.\nHowever, the stock market reflects what is expected<\/em> to happen to the\neconomy. <\/p>\n\n\n\n

Although some political leaders\ndoubted the impact of the coronavirus on the United States, a growing uncertainty\nwas becoming evident in U.S. financial markets. As the coronavirus worked its\nway through China, South Korea, and Italy, U.S. stocks became increasingly\nvolatile and returns became negative. According to Morningstar, the return of\nthe S&P 500 was -0.16% in January and -8.24% in February. Clearly, the\nmarkets were reflecting the increasing concern of the economic impact of the\nvirus on the world and the United States. <\/p>\n\n\n\n

The coronavirus created great\nuncertainty \u2013 in terms of both healthcare and the economy. And it wasn\u2019t just\nthe United States, it was global.  The\nyear-to-date returns through February were down significantly for most stock\nmarkets around the world. Stock market declines in the first two months of 2020\nincluded: Canada -5%, Mexico -7%, Germany -11%, France -12%, Japan -9%, and\nChina -7%. The global economic and healthcare crisis was clearly reflected in\nfinancial markets around the world. <\/p>\n\n\n\n

March began\nwith another week of stock market turmoil. 7%, 13%, and 20% – those are the\nmagic drops in the S&P 500 that trigger \u201ccircuit breakers\u201d for the New York\nStock Exchange (NYSE). Circuit breakers are when stock market trading is halted\nto give investors and traders a breather to assess what is going on and avoid\npanic selling. A decline of 7% triggers a 15-minute halt in stock trading; a\n13% decline triggers another 15-minute halt. If the S&P 500 declines by 20%\non a given day stock trading is stopped for the day. On Monday morning March 9,\nthe S&P 500 declined by over 7% and trading on the NYSE was temporarily\nhalted. The growing uncertainty and impact of the coronavirus on global\neconomies was evident once again. The S&P 500 finished the month with a\n-12.51% return.<\/p>\n\n\n\n

Consumer\nspending accounts for approximately two-thirds of U.S. GDP growth and growth in\nconsumer spending fueled the recent economic expansion. Any event that reduced\nthat spending would derail the economic growth. The coronavirus would change\nconsumer spending quickly and significantly. As the virus spread in March and\nstay-at-home orders became all too familiar, a service-sector economy would be\nsignificantly impacted and quickly. That\u2019s pretty much what the financial\nmarkets were forecasting; and that is exactly what happened when the U.S. Department of Labor\nannounced that initial jobless claims exploded to a seasonally adjusted 3.28\nmillion in the week ended March 21 up from the prior week claims of only\n282,000. Unemployment claims doubled the following week to 6.65 million.<\/p>\n\n\n\n

While some leaders may have doubted the economic and healthcare impact of the coronavirus, the financial markets said otherwise. The stock markets reflected the growing concern and expected economic impact on corporate profits around the world. The U.S. stock market was a precursor to what would happen in the U.S. labor market.<\/p>\n\n\n\n

CBEI Blog Series: The Coronavirus \u2013 Why the U.S. Economy Will Never be the Same<\/strong><\/em>
Part 1: What Happened \u2013 A Review of the Economic Impacts<\/a>
Part 2: What Happened \u2013 A Review of the Stock Market<\/a>
Part 3: What Will Change \u2013 Supply Chains<\/a>
Part 4: What Will Change \u2013 Healthcare<\/a>
Part 5: What Will Change \u2013 Deficits and Government Spending<\/a>
Part 6: What Should Change \u2013 An Appreciation for Service Sector Workers<\/a>
Part 7: What Should Change \u2013 Securities Regulation of Congress<\/a><\/p>\n\n\n\n

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Download Full Report<\/a><\/figcaption><\/figure><\/div>\n\n\n\n
\"Kevin<\/figure>
\n

Kevin Bahr is a professor emeritus of finance and chief analyst of the Center for Business and Economic Insight<\/a> in the Sentry School of Business and Economics at the University of Wisconsin-Stevens Point. <\/p>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"

The stock market is not the economy. However, the stock market reflects what is expected to happen to the economy. Although some political leaders doubted the impact of the coronavirus on the United States, a growing uncertainty was becoming evident in U.S. financial markets. As the coronavirus worked its way through China, South Korea, and […]<\/p>\n","protected":false},"author":136,"featured_media":10205,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,7,527],"tags":[533,124,532,305,343,344],"_links":{"self":[{"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/posts\/9999"}],"collection":[{"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/users\/136"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/comments?post=9999"}],"version-history":[{"count":8,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/posts\/9999\/revisions"}],"predecessor-version":[{"id":10217,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/posts\/9999\/revisions\/10217"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/media\/10205"}],"wp:attachment":[{"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/media?parent=9999"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/categories?post=9999"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.uwsp.edu\/cps\/wp-json\/wp\/v2\/tags?post=9999"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}