Hitting Close to Home By: Gabriel PotterMBA, AIFA® 2020.05.04

Lockdown has ended for some states.  A greater number of states will end their lockdown in the next few weeks.  Naturally, everyone is eager to reopen the economy, but the process will be necessarily slow.  Let me explain why with an anecdote.  I’m going to briefly tell you about our next-door neighbors.  These observations are true, with the caveat that I’ve changed their names.

Daniel and Monica live in the house on our left.  They have three extremely friendly dogs and a menagerie of other pets, including a parrot and iguana.  They are playful and ambitious with food – they love their barbeque smoker & coffee roaster – and they are both active bikers and joggers. Lindsay lives on the house to our right.  Lindsay, a retired pastor, is still deeply involved with the community.  She makes a point of making friends with and caring for her neighbors.  For instance, she recently wrote a short essay (for a local publication) about how she makes connections and friendships with other people on our street. 

While we love our neighbors and we’ve certainly seen them (from an appropriately high distance), more than usual during the lockdown, it’s for the best that we’ve maintained social distancing over the past few months.  Here’s why:  Lindsay is in a high-risk bracket, for being elderly if nothing else.  Meanwhile, Daniel and Monica are finally getting back to normal after they both fought off COVID-19.  Daniel is a respiratory technician and Monica is a registered nurse at a local hospital; it was entirely probable that these high-risk, front-line workers would be among the first to get sick.  At an abstract level, most people understand the theory about why they should follow the public health guidelines on social distancing.  For my wife and I, there is a clear-and-direct chain of potential contact with dangerous consequences if left unchecked.

Thus far, the markets have been resilient to the devastatingly poor GDP and unemployment numbers because the mandated suppression is considered temporary.  If consumer behavior reverts to pre-crisis “normal” too rapidly, that could lead to an increase in infections which will inevitably lead to future lockdowns, compounding the damage and making much of it permanent.  In other words, by managing the health crisis and there will be an economic slowdown.  In our current status, there can’t be one without the other. But there could be an ever greater impact if we cannot handle the upcoming months with care and caution.

 

 

 

 

Gabriel Potter

Gabriel is a Senior Investment Research Associate at Westminster Consulting, where he is responsible for designing strategic asset allocations and conducts proprietary market research.

An avid writer, Gabriel manages the firm’s blog and has been published in the Journal of Compensation and Benefits,...

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