Another generation's time in the barrel
Welcome to “Not Pretty, Not Rich,” a newsletter meant to keep you up to date on what’s happening in the markets and economy, and what you can do to take advantage — if anything.
A reminder that I’m now sending this out on a Tuesday/Friday schedule for the time being. If any of you would like to see it more or less, let me know.
A disclaimer: I’m neither a financial expert or a professional. I’m just a guy who writes about money, and this newsletter is a place for me to share my opinion, views, and resources. It’s unaffiliated with my employer, and all views contained within are my own.
And with that, we’re off. Like a herd of turtles. It’s Tuesday, May 12.
Survey the damage
As I wrote about last week (prior to the April jobs report having been released), last Friday would be a day to remember. And it was, so let’s recap:
In April, the U.S. lost 20.5 million jobs.
The unemployment rate jumped to 14.7%.
Average hourly earnings actually went up by $1.34, an indicator that low-earners were the most heavily impacted.
The unemployment rate is now significantly higher than it was during the Great Recession (10%) and is the highest we’ve seen since the Great Depression (24.9%).
So, take note, because you’re living through historic times. Obviously, what the economy is experiencing now is different from the Great Recession and Depression as it was brought on, suddenly, by an external threat. And while some people remain cautious about a fast recovery — and there will be a quick recovery, in all likelihood, to some degree — it’s probably going to take a long time before things return to normal. We’re not talking months, we’re talking years.
I think it’s important to put this in perspective to realize just how deeply this pandemic has affected the country. I know that life, for many people in the U.S., hasn’t changed all that much. But I would just give a word of caution to those who think this thing is going to blow over by Labor Day: We’re in for a bit of a ride.
Gen Z, welcome to Thunderdome
I graduated from college in May of 2009. It was a tough time to enter the workforce, and though I wasn’t exactly sure about what I wanted to do at the time, graduating into that economy set me back. I had to work a lot of dead-end, bullshit jobs before I found a professional track. And now, I’m afraid it’s about to happen again to the next generation.
In fact, everyone’s going to take a hit from this. People who were hoping to retire are probably going to have to rethink their plans. People in the middle of their careers are facing furloughs, layoffs, and salary reductions. And those who are just entering the workforce will have a tough time finding a job (at least one that they want), and will have to contend with the ramifications of graduating into a recession.
This brief, published a few days ago by TD Economics, goes into this in detail. It’s dense, so here are the highlights direct from the report:
Recessions are never kind to the younger generation of workers, but the current one has been particularly cruel. The youngest (aged 15 to 24) have by far shed the most jobs during this downturn, in part due to their higher concentrations in service and sales occupations.
Economic research shows that entering the job market during an economic downturn has lasting effects on lifetime earnings, with gaps in income relative to luckier cohorts lasting for up to a decade.
Millennials (aged 24 to 35) have also been hard hit by the economic shutdown. The shock to income comes at a time when many are swimming in debt to a greater extent than the generations that came before them.
So, even if you haven’t directly been impacted by the pandemic, odds are that someone you know and care about has. If you have kids, nephews, nieces, grandchildren, whatever — this is likely to be a defining event in their lives.
Is this acceptable?
Some places are allowing life to return to normal. That doesn’t mean that things necessarily will return to normal, but in some parts of the country, you can go to the gym or grab dinner or get a Mickey Mouse tattoo.
And that was inevitable. But I think it’s important that we all step back and put things in perspective. This is a once-in-a-generation type of event (hopefully), and it’ll have repercussions for years to come.
The stock market has shrugged things off to a remarkable degree, and I think that many of us will, too. But let’s keep in mind that, when it’s all said and done, that more than 100,000 people in the U.S. will be dead because of this pandemic.
Without pointing blame, it’s hard to understate how much of a disaster this has been. We had safeguards and protocols in place that weren’t followed or that were ignored for no discernable reason. We aren’t testing people like we should — on Monday, we celebrated having tested 10 million people, while experts say we should be testing millions of people every day.
Meanwhile, we’re being told that we’re in a good position to handle a second wave of infections. This, of course, implies that the people in charge know that a second wave is coming. Just keep in mind that we haven’t gotten through the first wave yet.
All of this is to say that you should be upset about this. You should be angry. We should expect better, and we should all demand it.