Coronavirus: Picking a letter for the recovery – Charles Schwab

It’s human nature to look ahead to brighter days and it’s the ‘job’ of markets to do the same. Regardless of the murkiness ahead, economists are starting to assess the ‘shape’ of the recovery, per Charles Schwab.

Key quotes

“In a perfect world, once the economy starts to open back up, a ‘V’ recovery would take hold. That may be wishful thinking other than for certain high-demand areas of the economy.”

“For now, we are experiencing an ‘I’ (straight down).” 

“Looking ahead, we may see a number of different letters; including ‘L’ (think cruising perhaps), ‘W’ (especially if we suffer COVID-19 setbacks/re-eruptions) or ‘M’ (the dreaded upside-down ‘W’). But one letter may be the best one to illustrate the broad economy: ‘Y’.”

“A ‘Y’ may be apt because there were already fault lines seen in the economy before the COVID-19-related economic implosion. Once the economy begins to open back up, we could experience a short-term surge in growth; but that’s unlikely to be sustained (hence the ‘Y’ shape).”