With the huge amount of money government pumped into the US economy it better stay at a relatively ok level, but it really depends on where you live and what sector you are in.
A close friend of mine is an engineer working for a major airline, while his job is stable they are getting 25% pay cut until at least Q1-Q2 2021.
Some folks I know in accounting are not getting their yearly raises and promotions come with less pay raise, likely less bonus while their firm are actually doing very well due to lower cost(less travel, office catering, end of busy season party and treats, etc)
Another friend that works in computer network related space actually got more pay raise then usual and extra bonus due to the higher demand for their service.
It's different compared to 2008 when the economy was hit with a systematic downturn, this one is more sector and region specific, and people are less likely to cutback(except for maybe Feb-May when things first started) as much as they did in 2008, and impact on overall spending should be relatively small.
Another factor is due to the limitation, and non-systematic impact, I believe there is more spending shifting than spending cut. Let's say if someone usually spend $2000 a year traveling and can't do that now, he/she may spend some or all of that on other goods or services. Some may be used to spending money on musical or movies, and now they are shifting those theater spending to online streaming or other digital contents.
I do think the classic knowledge of economic doesn't cover non-systematic downturn as well as they do with the systematic ones.
Personally I think the real question is, will the economy and job market be able to get back on course before the government money stop or run out, and we should be able to see that in the next 6-18 months.
As for the financial market, judging by the current valuation and amount of IPOs, I think we are entering a dangerous territory, you can not have a never stopping bull market, so it's all about when the real bear will hit.
Quote:
Originally Posted by Alfisti
I have been misunderstood in this thread. I am not disputing the auto market, prices are clearly high even if some softening has happened this pas month. What I cannot accept is this theory that suddenly everything we knew about economics is out the door.
Just because the impact of job losses was felt the most by entry level folks, doesn't mean everyone else is in vacuum. The lack of demand due to entry level job losses SHOULD see professional roles diminish as firms cut back due to lower sales, if this is not happening then demand must still be robust but how can this be possible amidst monumental unemployment numbers?
Now, apparently the unemployment rate has dropped to below 7% which at least explains the current situation but in March through June, surely it had to be the stimulus money keeping things afloat or we can just bin everything we thought we knew about economics.
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