Investment Update and Comments on Jobs (How Many and How We Work)

We wanted to address a couple of points following last week’s update. As a reminder, the market’s recent choppiness after strong gains since March does not surprise. We have gone slightly more defensive in your portfolios.


High Unemployment

The spike in unemployment from below 4% last year to over 10% this year is blamed mainly on the COVID lockdowns. Some of the jobs are coming back as case numbers decline and state economies reopen for business. (Indeed, the government reported a decline in unemployment to below 8.4%.)

However, a resumption of layoffs in the private sector (moving from jobs temporarily furloughed to jobs permanently eliminated) might slow the recovery in late 2020. (Case in point: United Airlines expects to furlough over 16,000 of its 90,000 workers in October[1]. American will lay off another 19,000.[2])

Another factor to watch is the “fiscal cliff” that could cause further shortfalls in income for unemployed Americans. Many people claiming unemployment received additional government money. Such as an extra $600 per week in benefits. (Government income supplements, or “transfer payments”, ballooned to nearly 30% of total income from roughly 17% prior to the recession.)

If Congress fails to enact another CARES Act, the loss of the extra weekly benefit might put a big dent into Americans’ income.

Source: FRED Federal Reserve Bank of St. Louis and ZeroHedge (


Structural changes in “the new economy”

    • Urban to suburban/rural – Lockdowns, rising crime, and high cost of doing business is motivating workers and businesses to rethink their commitments to urban centers. While causing real estate booms in markets outside, cities inside might be suffering in terms of vacancies and oversupply for a while.
    • Work from home – pandemic lockdown has alerted employers to the risk of widespread disruption if they contain operations only to corporate offices. Travel & entertainment budgets have also been cut in response to corporate expense discipline.  New technology has lowered the bar for many professions to work remotely and productively.
    • Physical to electronic (cash, shopping, business) – Online adoption from the lockdown might also continue into other areas of the economy and society. Infrastructure needs will rise to accommodate this shift.

We continue to watch the markets and how your investments are positioned.

Please reach out to us with any questions.



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