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For Economy, Worst of Coronavirus Shutdowns May Be Over
Recovering air travel, hotel bookings and mortgage applications are among the early signs the US economy is slowly creeping back to life.

Truck loads are growing again, air travel is up slightly, mortgage applications are rising, and more people are applying to open new businesses. These are a few positive signs showing the US economy is slowly creeping back to life.

Current projections have the economy contracting by -6% to -7% this year and unemployment lingering in the double digit percentages for a while.

Spending on hotels, restaurants, airlines and other industries hurt by social distancing remains low but appears to be picking up. Check out this graph illustrating the number of travelers passing through TSA security screening checkpoints –

And this graph illustrating the YoY change in seated dinners at restaurants on the OpenTable network in 8 states –

Data is starting to show some slight growth back to normal – the real question is “will there be a second coronavirus wave in the Fall?” Let me know your thoughts below.

How Schools Will Be Reopening in the Fall
Speaking of the Fall, let’s talk a bit about how schools will be reopening later this year.

Students wearing masks, eating lunch in classrooms and attending school in person only two days a week are among the scenarios being looked at in school districts throughout the US. Children who are academically behind or without internet access would get preference for in-person learning.

Other plans prohibit sharing school supplies and desks closer than six feet apart, and limit parents and other visitors on campus. Some school districts planning a mix of in-person and remote learning are working to offer full-day child care.

“Nothing replaces a real teacher in a real classroom. Online teaching may seem great, but it’s not the same.” said a Dallas high-school teacher.

Florida is considering measures such as temperature checks, face masks, eating meals in classrooms, one-way hallways to reduce contact and no outdoor recess or gym.

For those of you going back to school in the Fall, what do you think is necessary and “unnecessary”? Let me know in the comments below.

Coronavirus Threatens to Hobble the U.S. Shale-Oil Boom for Years
American shale drillers helped turn the US into the world’s top oil producer, topping 13 million barrels a day earlier this year. It likely will be years before they reach such heights again.

Shale companies lead a renaissance of American oil production, helping to more than double output over the past decade. That propelled the US past Saudi Arabia and Russia and made the country an important competitor in the geopolitics of energy and global markets.

While oil prices have rebounded in recent days and are above $33/barrel, US output is still poised to fall because companies aren’t drilling enough wells to make up for production declines from existing wells. Shale wells produce a lot of oil and gas early on, but quickly lose steam.

Without investing in new wells, many companies’ output would decline by -30% to -50% in just a year. For all you visual learners out there, here’s a graph –

Some sizable US drillers, including Whiting Petroleum Corp. and Ultra Petroleum Corp. have filed for bankruptcy while Oasis Petroleum and shale-drilling trailblazer Chesapeake Energy Corp. have warned they might not be able to stay in business.

Investors are less inclined to recapitalize companies for growth, preferring they return cash to shareholders. Many that can’t raise equity will use their cash flows to repair balance sheets, leaving only a handful of companies able to grow. Either way, shale companies that emerge from this downturn are likely to act differently than the growth-obsessed frackers of recent years.

I personally am not invested in oil / shale companies like the ones mentioned above. I don’t like investing in commodities or businesses that rely on them (airlines for example). Are y’all scooping up any of these companies? Let me know.

Summer Jobs Dry Up and Teens Face Highest Unemployment in Decades
Younger Americans are having little luck finding summer jobs.

COVID-19 outbreaks throughout the country have dried up many of the traditional opportunities that high school and college-aged students rely on each summer. Unemployment rates for teens aged 16-19 hit 32%, marking a high not seem since at least 1948.

Since 2008, teen unemployment has been steadily falling. Summer jobs had been rising in popularity, reflecting a healthy labor market. COVID-19 swiftly flipped that on its head – 2M+ retail jobs disappeared in April as thousands of stores closed.

While traditional temporary jobs for young workers are in short this summers, teens could find work in warehouses and distribution centers – students looking for summer work should be flexible and willing to take roles other unemployed people may not want.

“Be willing to take work that a mother of two can’t take and being flexible with overnight shifts, or doing delivery at the restaurant you used to work at”, says Traci Fiatte, head of nontechnical staffing at recruiting firm Randstad.

Did COVID19 wipe out your summer job/internship plans? What are you doing now instead?

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Responses

  1. Austin, do you think the slow recovery of the economy and the positive sentiment of getting back to normal can somehow hide the economic impact of the last 2 months? It has to eventually have an impact, right? I’m just baffled by all the green in the wall street. 

    1. No. 34 million people are unemployed. Businesses now have margin contraction due to additional sanitary support levers they’re being forced to pull. 47% of people have a balance on their credit cards, up from 42% in April. It just doesn’t make sense man.

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