I may scream the next time I hear the phrase "these are unprecedented times." This cliché seems to appear in most of the emails I receive, not to mention news articles and industry surveys. Unfortunately, it is accurately descriptive of the current economic climate.
This article from The Wall Street Journal paints a grim picture of our national debt as well as our stagnant economy. Meanwhile, U.S. equity markets have climbed into record territory and sales of existing homes have soared while the median price of a home continues to rise. On the other hand, unemployment claims are stubbornly high as layoffs continue across the economy, retail sales have plummeted and the stream of new business bankruptcies continue.
So, I have to concede that this is an unprecedented mix of economic news.
How can businesses survive, let alone succeed, in this environment? The antidote for this toxic mix is caution, expertise and experience - all of which may be in short supply when they are needed most. There are no shortcuts or quick fixes in the face of uncertainty.
U.S. government debt is on track to exceed the size of the economy for the 12 months ended Sept. 30, a milestone not hit since World War II that has been brought into reach by a giant fiscal response to the coronavirus pandemic. The Congressional Budget Office is expected to report on Wednesday that federal debt held by the public is projected to reach or exceed 100% of U.S. gross domestic product, the broadest measure of U.S. economic output. That would put the U.S. in the company of a handful of nations with debt loads that exceed their economies, including Japan, Italy and Greece. The surge in borrowing so far isn’t creating angst among investors or hampering the U.S.’s ability to borrow more. Investors have gobbled up U.S. Treasury assets, drawn to their relative safety.