Article source: ConstructConnect

• A double-digit percentage decline in Q2 GDP, a huge jump in unemployment insurance claims and a $2 trillion stimulus package – numbers such as these are going to play havoc with multi-equation econometric models going forward.

• There’s much commentary in the media that the economy will quickly bounce back due to the ‘pent-up’ demand that is accumulating. While it’s true that on the other side of the ‘slump’, there may be large % gains in GDP, they will arise mainly from a low denominator in the calculation (i.e., a low base from which to grow.) Yes, people will rejoice in being able to return to the theater and go out for a meal. Previous recessions have shown, however, that with so many people losing their jobs, a great deal of paying down debt and attempts to build or re-build nest eggs will be taking precedence over consumer spending (70% of GDP).

• Longer term, the stimulus package will be inflationary. Tariffs are inflationary. It’s time to abandon, for a long while, any further talk of taking aggressive action on the foreign trade front. A likely pandemic-inspired move towards de-globalization of supply chains will do the trick on its own.

• If you’re wondering about possible backlash against aspects of the stimulus package, you might want to check out ‘#notdyingforWallStreet’ on social media.