MFF Economic Outlook: 6/24/20

Written by: Elizabeth Salas Evans, President & CCO at Cayena Capital Management; MFF Visiting Scholar

June 24, 2020

Since Memorial Day and our last economic outlook, it feels as though a lot has changed and nothing at the same time. A global recession due to COVID-19 has been confirmed by the World Bank, with the International Monetary Fund (IMF) signaling a worsening recession, which many fear could mean a global depression. The death toll in the United States (U.S.) has increased about twenty percent in the past month, with the U.S. exceeding one hundred and twenty thousand American lives lost, due to the Coronavirus. With all fifty states open for business and the busiest months for travel and tourism upon us, individuals and families around the world grapple with how to make the best out of their Summer. The Mortgage Bankers Association (MBA) has seen mortgage applications “yoyo” in the past month, with weeks ended June 5th and June 12th up over eight and nine percent, and week ended June 19th printed this morning, showing a decline of eight-point seven percent. Initial jobless claims, which are reported weekly in the U.S. on Thursdays, have held steady with at least one million newly unemployed Americans filing for benefits each week. This brings the unemployment rate to over fourteen percent, with over forty-five million unemployed Americans, as main street looks over at Wall Street wondering if there might be something in the coffee. The Dow Jones Industrial Average Index (DJIA) broke through twenty-seven
thousand this month, Standard & Poor’s Index blew past three thousand, and the Nasdaq hit all-time highs smashing through ten thousand. With increasing uncertainty around how long this recession may last, many investors are starting to sober up as businesses and municipalities assess their balance sheets to determine if it makes sense to renew leases for commercial properties located in high rent, metropolitan areas. With high levels of uncertainty also comes volatility, neither of which we see subsiding, particularly as we near this Fall’s federal election and see legislatures wrestle with how to manage voting during a global pandemic.

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