We were having a discussion about this last night at dinner (OK, avoid the snide comments ). I had a hard time coming up with anything, because the election and COVID will have profound consequences no matter how it goes.

Should Trump prevail, I predict a minimal bump to the stock market (perhaps even a slight uptick) but massive, massive deficits. OR he'll figure he's won the election so screw it, forget trying to prop it up.

Should Biden win, then I expect the market to drop, but perhaps pick up again reasonably quickly since I think his administration would be more likely to address unemployment via infrastructure development funding, etc. But those massive deficits are still there.

But I'm no economist, futurist, or fortune-teller. Just curious what the rest of you are thinking.....

I have a problem with making a prediction in your time frame.

I think we're probably good and screwed for the next six months, but beyond that there are too many unknowns. Whether therapeutic treatments are developed, how expensive they are, how well they work. Who wins the election. How fast the virus comes roaring back this summer, and whether we decide to accept the deaths and the long-term health consequences or whether we go through another round of quarantine/social distancing. Whether it's determined that immunity from the virus is even possible.

So, more than six months out, I can't say.

I do not anticipate that Mary Anna and I will be leaving semi-total quarantine in 2020, unless the university is serious about re-opening in September and doesn't allow faculty an opt-out (which would be heinous, but is possible).

Yes indeed. Too many very large unknowns.

Nonetheless, I think there are certain things we already can see, things that will have an impact over the next few years no matter what course the disease takes, or what course the technology takes.

1. Supply chains are unlikely to revert to their prior patterns. I suspect many firms will seek to diversify sourcing rather than concentrate on mass supply from the lowest cost (Chinese) vendors. That way lies big economic and political risk.

2. Policy may support that change. I suspect many governments will insist on having domestic sources of supply, and will have to subsidize those activities if there are lower cost producers elsewhere. This may be good for certain industries, and bad for others.

3. We have a debt bomb that may limit what the next administration can do. This may be more of a political problem than an economic one. As long as interest rates are hovering near zero, just about anything the government borrows to do is worthwhile as long as the spending has a positive economic payoff, no matter how small.

4. Next wildcard, the developing world. We've only begun to see bad stuff happening in Africa, Latin America, and south Asia. What happens if the economic destruction is really deep across the developing world. We may see debt problems that challenge the global finance system again.

5. Speaking of which, problems inside the Eurozone may reemerge if Italy and Spain can't handle their rising debt, and Germany doesn't agree to Covid-bond the problem away.

I'm going to cop out of predicted scenarios and how they're apt to interact with one another.

Apart from the many influences at work (and affecting each other over time), I'm having trouble peering into my crystal ball, because I don't know what I'm looking for. I've been very influenced by an on-going theme at the NYT - how much the Stock Market (Dow and other readings) and the (real) Economy are divorced from one another these days.

Trump's maneuvers vis a vis the Market are both politically (election) and economically motivated (the semi-game the Market has become, with many players manipulating it). They are increasingly separate from actual events.

How he jerks the Market around will certainly have a massive effect on the world of investing - the feeling of wealth or poverty. (Referencing time before the election - the only time he can impact it strongly).

However, it's seeming clear that these interventions are increasingly divorced from the underlying realities of the nation's basic economic strengths/weaknesses in all its sectors.

Besides this splitting of America's financial reality, there is also the great pre-election unknown, which can (and will) affect all outcomes, what happens with the spreading of the Pandemic. Number of deaths, industries being able to work or not, widespread poverty and devastation or not. How our world changes. This unknown is an almost unimaginable wild card at present. One can only hope reporting about it is honest.

The Markets Are Not the Economy

A good piece in the WaPo on the likely magnitude of the downturn (absent several trillion more dollars of federal borrowing to keep states and cities afloat).

Scale of the Disaster

Things will return to normal within six months.

This is a really good time to buy if you’ve been priced out of real estate, as sellers are worried and are cutting prices, with interest rates low.

People will keep dying of corona, but no one will care.

Schools and colleges will resume in the fall.

No way will people tolerate another shutdown, no matter how bad things get.

quote:

Schools and colleges will resume in the fall.

Cal State Shut for Fall

Residential colleges are a different kind of animal. They will be trying harder to open. Schools that are largely commuter may behave differently. We don't have "typical colleges." We have huge diversity.

Like your spunk though. Go for broke. No nuance. No holds barred. Maximalist optimism for the fast status quo!

Did the WaPo article I posted cross your eyeballs?

quote:

This is a really good time to buy if you’ve been priced out of real estate, as sellers are worried and are cutting prices, with interest rates low.

Maybe. What's your evidence? The St. Louis Fed reports data quarterly, and the first quarter showed no collapse in real estate prices, just a slowing of the rate of increase. We won't have second quarter data until the summer.

Home prices in the age of coronavirus

For me, in my two areas (SE Virginia and Santa Fe) there is no fall in prices. Heck, Zillow (and the tax assessor) both think my Santa Fe home is well outperforming the stock market (when it was doing well). I'm in the end stage of refinancing my Santa Fe home, which will free up a fair chunk of change.

The housing market is sure uncertain, but that's on both sides (sellers and buyers). Prices aren't collapsing. It's not a "buyer's market."

quote:

Originally posted by Piano*Dad:

quote:

Schools and colleges will resume in the fall.

Cal State Shut for Fall

Residential colleges are a different kind of animal. They will be trying harder to open. Schools that are largely commuter may behave differently. We don't have "typical colleges." We have huge diversity.

Like your spunk though. Go for broke. No nuance. No holds barred. Maximalist optimism for the fast status quo!

Did the WaPo article I posted cross your eyeballs?

The WaPo has another interesting perspective today.

https://www.washingtonpost.com...b161ff6e5_story.html

Well, the US is now experiencing massive, historic levels of unemployment. But you asked where does one ( ) think the economy is going in the next 12-18 months.

I think it's headed for something equivalent to the Great Recession or an actual depression.

You asked.

And, yes, I did have my coffee this morning.

The irony to me is that if Trump wins in the fall, I think the market will rise. But the economic outlook for many people (those not invested in the market, those who have lost their jobs in the past few months) will be far worse.

I agree, too many unknowns. Maybe the better question should have been what are the longer-term impacts to the economy under Trump v (presumably) Biden? Let's look out, say, 5 years or more.... in other words, after this next president has left office.