The beginning of the Great Depression may have been this abrupt, but we don’t know because we didn’t collect these statistics back then. It’s hardly an exaggeration, then, to call the unfolding crisis unprecedented.
You would never know this by looking at the stock market.
As of Monday, the S&P 500 was down just 0.7% for the year — par for the course to a seasoned investor.
What should we make of this?
The easy answer is that an enormous amount of money has poured into the economy through fiscal and monetary stimulus.
The $1,200 checks sent to taxpayers over the past two months, combined with the supplemental unemployment benefits that expire at the end of this month, have been so salutary that many workers in low-paying jobs have purportedly found unemployment to be more lucrative than employment.
Additionally, the capital markets are awash with liquidity. Since February, the Federal Reserve has purchased $3 trillion worth of assets, primarily Treasuries. That’s nearly three times as much as it spent in the early stages of the financial crisis of 2008-09.
