March 30, 2020 — The Economy Stops on a Dime

MARCH 30, 2020 – THE ECONOMY STOPS ON A DIME

The job expansion that began in 2010 has ended.  We hope temporarily.  Until March, employers added to the payrolls for a record setting 113 months.  The unemployment rate was 3.5% in February, levels that were last seen in the 1960’s.  And, finally, wages had started moving up after lagging the expansion.  As a result of the coronavirus, more than 1 million people are estimated to have filed for unemployment benefits.

Now some estimate the unemployment rate could rise up to 20%, levels not seen since the Depression.  However, if the country can get back to business quickly, aided by Congress’ $2 trillion aid package, the jobless rate could fall almost as fast as it rose. This is not a systemic recession, rather the result of shock.  But if the virus remains difficult to contain, the pain will be prolonged.

It is impossible to predict what will happen in the next weeks, but one must believe in the resilience of the people and businesses, and that once the impact of the virus is managed, we can all return to a familiar life.

With swap rates at historic lows, pricing forward LIBOR down to .25%, we believe this is an unprecedented opportunity to lock in extremely multi-year fixed rates.

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