The Economy Continues Faltering Going Into Christmas – What It means For You?

The Weeks Biggest News To Watch Is…

The new coronavirus lockdowns are already having a negative economic affect as unemployment jumps to its highest weekly level since September.

Today I want to give you clarity and answer – As We Head Into Christmas The Economy Continues Faltering… 

  1. Third Quarter Earnings Continue

Third quarter earnings season is now about a month old…

So far pretty much all companies are reporting better earnings than the last 2 quarters.

This makes sense because for the most part lock downs ended during the last quarter and things got back to some semblance of normal.

But now with coronavirus cases exploding and cities and states nationwide reenacting lockdowns this likely won’t continue into next quarter.

But for now, at least, companies are reporting much better earnings which is of course great for your retirement portfolio.

This week earnings season continues with a light week due to the Christmas holiday with only 185 companies reporting earnings… Including some big names we’ve written about in the past.

I’ll keep you updated as necessary on anything important with the economy or any company I’ve written about in the coming weeks as needed.

Seeing quarterly and yearly earnings helps me understand what’s going on in the market via individual stocks…

The other major thing you need to pay attention to this week are the potential effects of the testimony to Congress from two important members of our government last week.

Retail Sales – Released On December 16th

Last week I told you to watch both the unemployment rate and retail sales…

Here’s what I said about both last week…

We’re still recovering from the initial stages of lockdowns and panic that began in March.

Since then, most lockdowns and quarantines were lifted which got people back to work, lowered the unemployment in the US and worldwide, and led to a record quarterly increase in economic output.

But Europe is already locking citizens down again in various countries including the entirety of England.

Will other parts of Europe, The United States, and the world follow suit and lock things down again?

If governments enact lockdowns again worldwide it would devastate the economy worse than the previous ones… Now businesses have even less cash and higher debt levels than in March.

And this means there’s far lower room for error, which could lead to more mass unemployment and bankruptcies.

Because 70% of the US economy is based on consumption – i.e. you and I doing and buying stuff.  This retails sales number is super important.

Retail sales dropped so much that in April 2020, they were back down to levels not seen since July 2013.

They’ve climbed slowly up since then.  And were above Pre Covid levels – in terms of absolute dollar sales at least – in September.

Will this continue now that cases are spiking again?

Will this fall, and put the economy back in danger with mass closures, bankruptcies, and layoffs?

Will President Elect Joe Biden enact nationwide lockdowns when he takes office in January?

Seeing these numbers when they release on November 17th will show us what retail sales were in October… And may also give us an idea on the above unanswered questions.

This is the major story to watch this week… To see if new cases of the coronavirus are negatively affecting a huge part of United States economic output.

These are the most important things to watch this week.

Will cases continue exploding?

Will the fighting over the now proposed $908 billion second coronavirus stimulus remain in negotiations in Congress instead of going to those who need it?

Will there be more lockdowns that further slow the economy and hiring?

We don’t have an answer to most of these questions yet because new cases are still exploding as are deaths.

And retail sales are something to watch this week when the newest data releases on December 16th.

The US is now not only breaking records in terms of new cases… But also, deaths as well… With the director of the CDC going as far as saying “daily US death toll will exceed 9/11’s for months.”

Meaning the director expects daily death tolls – for months – to exceed the 2,605 we lost on 9/11.  For example, we’ve now had 2 straight days in the US where death tolls surpassed 3,300 from the virus.

And the CDC director said he now expects this to last for months as hospitals nationwide reach max capacity in ICU units.

And total US deaths from the virus jumped to 291,800 since the pandemic began… This is more than the 291,500 soldiers we lost during the entirety of World War 2. 

If that isn’t scary enough in terms of health and our families and communities…  This and the new lockdowns as a result are already hurting the economy too.

On December 10th, 2020 US unemployment claims hit their highest weekly level since mid-September when 853,000 American’s filed new claims for unemployment.

Why?

In large part due to the continued huge spike in coronavirus cases and deaths nationwide leading many cities and states to reenact lockdowns.

And a study by The National Restaurant Association on December 9th said more than 110,000 restaurants nationwide have closed permanently because of the pandemic after the average restaurants seen a 36% decrease in revenue.

Like I said earlier this year…

I don’t know what the answer to this pandemic is in terms of health or the economy… But we need to figure something out soon or things are going to get even worse than they already are.

And with cases and deaths at all time highs combined with closures leading to more unemployment, things look like they’re about to get far worse.

***

Unfortunately, things continued getting worse on all accounts.

New cases and deaths are still at or near all time records from the virus.  On December 17th, the US broke its record for hospitalizations… For the 12th day in a row.

As of then, there were more than 114,200 people nationwide hospitalized due to severe Covid symptoms.

Also, on December 17th the US broke the daily death record with more than 3,600 people dying from the virus in a single day.

New unemployment claims rose even further to 885,000 last week as more cities and states enacted lockdowns.

And because of these lockdowns and people losing their jobs retail sales also fell 1.1% into negative territory again.

These are all bad signs for the economy as we head into the crucial holiday family and friend gathering and shopping season.

The best way to protect your investment portfolio from any kind of economic or market crash issues?

Make sure you’re in great stocks that have the following traits…

  • They’re cheap
  • They have little to no debt compared to a lot of cash
  • They produce large profits and cash flows.
  • And make sure they aren’t in industries that could be hammered by more closures.

You can see stocks we recommend that fit this criteria at the end of this article.

This week try to take a bit of a break from all this bad news to focus on yourself… Your friends… And your family.

As we approach Christmas and New Year this is important to keep sane… Both personally and with your portfolio.

I sincerely hope you have a great Christmas, Hannukah, and New Year’s break.

I’ll keep you updated on any major news in the meantime.

Here are the articles from the last week in case you missed any…

Click here to see some of the stocks we recommend to Depression Proof Your Portfolio.

Disclosure – Jason Rivera is a 13+ year veteran value investor who now spends much of his time helping other investors earn higher than average investment returns safely. He does not have any holdings in any securities mentioned above and the article expresses his own opinions. He has no business relationship with any company mentioned above.

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