There is plenty of evidence appearing on a fairly regular basis that confirms the recovery is underway.
In May, the U.S. added back 2.5 million jobs. Granted the surge in May’s hiring followed a decline in employment from 14.5% to 13.3%.* The major beneficiaries, including the leisure and hospitality industries, still have more workers to add. Other major segments, including construction, retail trade and health services, have plenty of jobs to be filled with space capacity. We still have 19 million workers looking for jobs. However, the positive behavior of the stock market - combined with a very clear message from Fed Chairman Powell that he will continue to provide “ whatever it takes” to support the needs of our economy - should be a strong message to encourage investors.
It is important to note that this temporary downturn has been caused more by the coronavirus than the normal business cycle. A slow start at identifying the coronavirus on U.S. shores has penalized us in the short term but will soon be overshadowed by the magnitude of our recovery.
This recovery, despite all of the positive signs we are currently seeing, will be bumpy for a while until all of the stimuli has kicked in. It is my belief that a continuing, positive recovery for the balance of this year with a stronger economy for 2021 is a likely outcome.
I think you will agree that our history on the duration of recoveries is quite impressive. In statistics reported by the S&P covering 70 years, the average bear market lasted 14 months and produced a 33% loss. The average bull market has run for 72 months and produced an average gain of 279%.**
*Argus Research 6/5/2020
** Capital Group American Funds