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U.S. Economy Did Not Fare Well During the Second Quarter
From:
Greg Womack -- Certified Financial Planner Greg Womack -- Certified Financial Planner
Oklahoma City , OK
Tuesday, August 04, 2020

 

Last week delivered a mixed bag of financial and economic news.

As many expected, the U.S. economy did not fare well during the second quarter. COVID-19 lock-downs and business closings caused productivity to fall by one-third. Real gross domestic product, which is the value of all goods and services produced by our country, dropped 32.9 percent during the second quarter of 2020, reported the Bureau of Economic Analysis. During the first quarter of the year, productivity fell by 5 percent.

The Federal Reserve held its Federal Open Market Committee meeting last week. Fed Chair Jerome Powell committed to "…using our tools to do what we can, and for as long as it takes, to provide some relief and stability, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy."

Powell also said, "Elected officials have the power to tax and spend and to make decisions about where we, as a society, should direct our collective resources. The fiscal policy actions that have been taken thus far have made a critical difference to families, businesses, and communities across the country. Even so, the current economic downturn is the most severe in our lifetimes."

Our elected officials were unable to reach an agreement about how to support unemployed Americans whose jobs disappeared because of COVID-19. Enhanced unemployment benefits and a moratorium on evictions both expired at the end of last week. Congress met over the weekend and officials indicated they had made progress in negotiations, reported The Washington Post.

Earnings offered a glimmer of positive news for investors. Al Root of Barron's reported, "…companies are crushing overly bearish estimates…More than 300 [Standard & Poor's 500 Index] companies have reported second-quarter numbers so far. About 85 percent are beating Wall Street earnings estimates by an average of 22 percent."

Overall, blended earnings for the Standard & Poor's 500 Index (S&P 500) has declined 35.7 percent. If that is the actual change in earnings for the second quarter, it would be the biggest year-over-year decline since the fourth quarter of 2008 when earnings dropped 69.1 percent.

The S&P 500 and the Nasdaq Composites both gained last week. The Dow Jones Industrial Index finished the week lower.

 

Best regards,


Womack Investment Advisers, Inc.
 
 
WOMACK INVESTMENT ADVISERS, INC.

Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK  73013

California Office: 4660 La Jolla Village Dr., Ste. 100 - San Diego, CA 92122

Phone (405) 340-1717 - Toll Free (877) 340-1717 
 
 
Womack Investment Advisers, Inc. (WIA) is a registered investment adviser whose principal office is located in Oklahoma. Womack Investment Advisers, Inc. is also registered in the State of California, the State of Illinois, the State of Indiana, and the State of Texas. WIA only transacts business in states where it is properly registered, or excluded, or exempted from registration requirements.
 
 
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Name: Greg Womack, CFP
Title: President
Group: Womack Investment Advisers
Dateline: Edmond, OK United States
Direct Phone: 405-340-1717
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