Dark Times
On November 11, 2016, a few days after the presidential election, I expressed the following thought with some of you: “We enter dark times.” My concerns at the time included concerns about the food we eat, the air we breathe, the gutting of agencies like the FDA and EPA, and larger concerns about the environment and climate change. That week I also expressed concerns for the civil liberties of many non-white residents of our country and members of the LGBTQ community. Closer to home for me personally, I also shared strong concern that “tax cuts for the rich combined with other proposed changes (would) result in trillion-dollar deficits.” Little did I know that a global pandemic should be among my concerns.
Several things have happened over the last three years which suggest that many of my fears were not unfounded. Particularly a horrible tax law package (which I have complained about often) that I believe largely led to the projected fiscal 2020 deficit of nearly a trillion dollars (pre-COVID) at a time of “full employment” and a fairly strong economy. I’ve said it before and I’ll say it again… we, as a country, should NOT be deficit spending to the tune of a trillion dollars a year when things are going well. Huge deficit spending should be reserved for addressing times of crisis. I can think of many situations that would qualify as a crisis. At the moment, global pandemic comes to mind.
For some, it seems like there have been many ill-advised actions taken by our government over the last three years. Please indulge me one more thought before I move on to a more optimistic one. I just saw a clip featuring Jeremy Konyndyk, former director of foreign disaster assistance and former member of a team at the White House under the Obama administration which put together a pandemic response “playbook.” When John Bolton became National Security Advisor they got rid of the pandemic preparedness team at the White House. Jeremy goes on to say that “the playbook that was left behind clearly was not used.”
I’m ready for the “dark times” to be over.
A few short months ago there were some people with growing concerns about recession. With the understanding that recessions are inevitable and that we don’t always know what will trigger one, a few financial professionals who I follow were postulating that (barring some unforeseen event or set of circumstances) their current indicators suggested that the next recession was a year or more away. Enter unforeseen COVID-19. Now some of these same professionals are suggesting that we are at the beginning of a coronavirus induced recession. But the news isn’t necessarily all bad.
Dr. David Kelly, Chief Global Strategist at J.P. Morgan Asset Management, has been suggesting over the last week or so that “2020 is the year of the virus and 2021 will be the year of the recovery.” He suggested that this market cycle could look like “a fall, a stall, then a surge.” Obviously, he does not have a crystal ball, but he outlined his thoughts about how this could play out. We’ve more-or-less seen the fall (I hope). He goes on to describe a stalled economy which might normally continue to “slide” but for our government’s response. They are throwing lots of money at this to keep the markets from continuing to slide and several news items suggest that they are not done. Deficit spending in times of crisis, the way it should be (in my view). Dr. Kelly then suggests that a meaningful recovery will not come until we have a vaccine for this virus (he hopes 12-18 months) and that when it comes he thinks there could be a very meaningful surge as we get back to work and address strong post-crisis demand. Post-crisis demand which should emerge because many businesses and individuals will be saved from financial devastation by programs in the CARES Act and other programs that will likely follow.
Another year? It’s starting to sound like that to me. But when you consider that some believe we are three years into the “dark times,” I am starting to be a little more optimistic about the future.