Economic News 4/8/2020 – How to Weather the Storm of Coronavirus

By Michael Bunch

Coronavirus has crippled the U.S. economy, cost millions their jobs at least in the short term, crashed stock markets, and caused a massive drop in the price of oil. This type of upheaval has not been seen in the world since the Great Recession, possibly the Great Depression. So how does one weather the storm.

On the other side of these business downturns are opportunities. Individuals who can save money during the crisis or had a healthy amount of savings/liquidity before the crisis will find many opportunities in the aftermath. People sometimes feel bad about these opportunities, for example, a home goes into foreclosure, the tenants are forced to move out, a new investor comes in and buys the home from the bank. This all seems quite predatory, but without those who can purchase the home, willing to take the risk of acquiring the property, the home would remain vacant and cause homes nearby to drop in value, tax revenue from property taxes would be lost, and eventually the home would fall into disrepair.

The stock market, much like a tree that has been pruned, will create new growth following the problems of the virus. This means that unprecedented buying opportunities will exist for those who invest. This is the time to to take a page out of our grandparents playbook and be frugal! Saving money now and investing wisely will yield greater opportunity than it would have before the Coronavirus. For example, look at Microsoft’s stock price. It had high of $183.89 before the crisis, fell to $137.35 at the recent low point before the Families First Coronavirus Response Act, and now is at a median point $165.13. This would seem like a good buy point for this stock.

The Dow, S&P, and Nasdaq stock exchanges are all up between two and three percent today, part of a broader rally since the FFCRA passed as well. Since the 1900’s there have been many of these types of events, which economists call the “business cycle”. Economic growth as measured by GDP (Gross Domestic Product) will increase until a major event happens to alter that growth, or there is simply nowhere else for the economy to grow (think of supply and demand). Business Cycles since 1860 go up and go down in 5-10 year intervals typically. Without the contraction (shrinking of the economy), the expansion (growing of the economy) can not happen.

So what does this all mean to you? Since our lifetimes go across many of these cycles, it is important to consider your career carefully. Here is a list of relatively recession proof careers. Notice they largely focus on basic necessities in today’s age. In economic terms, we would call this careers that have a inelastic demand. Jobs in computer programming, health care, education, criminal justice, and renewable energy are probably a safe bet for these times.