Initial indicators show that Americans are very optimistic for an economic rebound in the short term. There are some good reasons for this optimism.
Here are five reasons why Americans are ready for an economic rebound never seen before in world history:
1. US optimism for an economic recovery is at an all-time high for most sectors.
People are ready to begin making money again like never before:
https://twitter.com/bullmarketsco/status/1257986643971256320?s=20
2. Theo Vermaelen at Knowledge.Insead.edu notes reasons for the optimism in the economy in the US. His first reason is:
First, the fall in stock prices is not the result of the collapse of an asset bubble. It is due to the interruption of economic activity to fight a disease. In contrast to 2001 and 2008, there is no reason to assume that asset prices and economic activity will not revert to their previous levels. This reversion could come soon, depending on how long it takes to manage the disease.
3. Stocks have already recovered up to 30% of what was lost when the market went sour. Theo says:
Second, while the S&P 500 dropped 30 percent between 1 January and 24 March, just a few weeks later (17 April) the loss is now only 10 percent, making it possibly the shortest bear market in history. Of course, markets could be wrong, but I believe there is an increased understanding that the value of a company is measured by the present value of expected cash flows from now until infinity.
4. Theo also explains how the actions taken by Trump have saved the market:
Third, in 2008 “evil” bankers were blamed for the financial crisis and they had to be punished. Hence Lehman Brothers was not bailed out, which created a panic on Wall Street. Today, corporations are not in the firing line and governments have responded by helping firms to deal with their short-term cash flow shortages. Voters haven’t expressed any outrage at bailing out the private sector, in contrast to 2008. Various initiatives from the US government include the Federal Reserve lowering interest rates to zero, starting a US$700 billion open-ended quantitative easing programme and lowering capital requirements for banks, as well as President Donald Trump’s initiative to launch an unprecedented US$2 trillion COVID-19 rescue programme and reopen the US economy.
5. Of those unemployed in the record breaking news for April, 75% are temporarily unemployed. These people expect to be back at their work soon:
The report indicated that a clear majority of April’s job losses — roughly 75% — are considered temporary, a result of businesses that were forced to suddenly close but hope to reopen and recall their laid-off workers. Whether most of those workers can return to their jobs anytime soon, though, will be determined by how well policymakers, businesses and the public manage their response to the public health crisis.
