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Is the economic recovery already underway?

July 22, 2020 / 2 min read

Recent economic data has been largely better than expected and consistent with an economy on the mend. Still, risks remain.

Economic data surprises to the upside chart

Coming out of a period of considerable pessimism, economic “green shoots” have emerged on a number of fronts. A broad swathe of data related to jobs, retail sales, and the cyclically important manufacturing sector have shown a marked turnaround after shocking weakness just a few months ago. Not only have recent trends been positive, the results have generally exceeded expectations, in some cases significantly.

The recent improvement reflects a sharp reversal from earlier in the year. The economy had generally been on a solid footing coming into 2020 before the COVID-19 pandemic pushed the economy into recession. The speed and magnitude of the decline was without precedent, making it exceptionally difficult to accurately estimate the impact of business closures, shelter-in-place mandates, and massive changes in consumer behavior that occurred virtually overnight. For a time, actual results were much weaker than forecasts. That has clearly changed, as parts of the economy began to reopen and evidence of a nascent recovery emerged that has thus far exceeded expectations.

Still, we would caution that the economy isn’t out of the woods. The recent surge in COVID-19 cases and resulting steps taken to reduce risk are a headwind to the recovery. Whether the economy takes a step back as a result remains to be seen, but the current pace of recovery appears to be slowing.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

Data sources for peer group comparisons, returns, and standard statistical data are provided by the sources referenced and are based on data obtained from recognized statistical services or other sources believed to be reliable. However, some or all of the information has not been verified prior to the analysis, and we do not make any representations as to its accuracy or completeness. Any analysis nonfactual in nature constitutes only current opinions, which are subject to change. Benchmarks or indices are included for information purposes only to reflect the current market environment; no index is a directly tradable investment. There may be instances when consultant opinions regarding any fundamental or quantitative analysis may not agree.

Plante Moran Financial Advisors (PMFA) publishes this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult a representative from PMFA for investment advice regarding your own situation.

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