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What To Do After 2020 Was The Worst Year For Economic Growth In 75 Years

In the last several weeks I showed you the various health, economic, and investment impacts Covid is having on the entire economy… And more importantly what this means for you.

Last week major corporate earnings including from the following giants came out…

  • Apple
  • Microsoft
  • Tesla
  • Facebook
  • Samsung
  • Visa
  • Johnson & Johnson
  • Mastercard
  • Chevron
  • AT&T

And they were generally great.

Most of the big companies beat earnings expectation on revenue and profits… Which sent their shares soaring.

Of course, last week all the craziness surrounding companies like GameStop and AMD as well.

Corporate earnings being great is a huge positive sign for the economy going forward.  Especially because it contradicts the negative unemployment and economic data I talked about last week.

The trading craziness is a huge sign of the market mania we’re in right now… Unless you’re 100% comfortable losing all your investment you should avoid these kinds of trades due to the enormous risks.

I’ll likely talk about these in the coming days as more comes out about what’s going on.

Both while important for things going forward weren’t the most important info that came out last week though.

For months, myself and others in the financial realm have talked about the economic, investment, and health devastation the pandemic is causing.

From banks, to deaths, to hospitals being overrun and out of capacity, to the largest weekly unemployment numbers we’ve ever seen, to market gyrations of thousands of points per day, and on and on…  Everything we dealt with last year from these perspectives was bad.

In many cases, last year we saw some of the worst things economically since World War 2 or The Great Depression.

This was proved even more when the US government released full year 2020 GDP numbers that showed the US economy grew at its slowest rate since 1946 – 75 years ago.

How bad were things in 2020 for the US economy?

It shrunk at a 3.5% rate for the full year.

9.8 jobs are still gone.

And 23.8 million adults are struggling to feed their kids.

This is from the US economic data and The Washington Post.

This is bad enough…  But here’s what David Wilcox Senior Fellow of the Peterson Institute for International Economics and the former director of the domestic economics division of the Federal Reserve said about last year’s economic numbers.

“2020 has no precedent in modern economic history,” “The influenza of 1918 and 1919 predates our modern system of economic statistics, and since World War II, there’s never been a contraction that even remotely approached the severity and the breadth of the initial collapse in 2020.”

More context…  This is only the 14th year since 1944 that US economic output was negative.

The other times were during World War 2 and the immediate aftermath, 2 brief crashes in the 1950’s, the Stagflation era of the mid to late 1970s, the 1987 crash, and the financial crisis from 2007 and 2008.

That’s it in the entire modern history of the United States.

How bad were things for individual small business owners?  The National Restaurant Association estimates more than 110,000 restaurants closed their doors forever in 2020.

And this doesn’t include the so far unknown tens of thousands of other businesses that closed forever lats year.

Even worse news, with new Covid cases and deaths still exploding – yes I’m sure you’re tired of hearing me say this but it keeps happening every week – we’re still in ecnomic trouble going forward.

“There has been a broad recovery but, economically speaking, we’re not out of the woods yet,” said Ben Herzon, executive director at IHS Markit.

When economic output falls at the world or country level, it negatively affects us all as I’ve said in the last few weeks…

And now 10 months into this pandemic the US has about 10 million fewer jobs than it did before the pandemic.

These are having massive ripple effects for the entire economy…

Since the pandemic began more than 70 million Americans have filed for unemployment benefits in the last 10 months.

This means in the last 10 months 40% of the entire US workforce has filed for unemployment benefits at one point or another.

40%… That’s 2 out of every 5 work age Americans.

That’s almost inconceivable.

And that’s what I’m watching this week.  The direction of company earnings, unemployment, lockdowns, and how these effect the entire US economy and us all going forward.

You already know how to protect yourself from the virus… Here’s how I recommend you protect your retirement portfolio – because if the economy doesn’t get back on track soon… A major Bear Market is coming.

If you’re looking for the best way to protect your portfolio as the economy hangs in the balance…

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.

To see some of those kinds of stocks that will help you protect your retirement portfolio – Click the links below.

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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