Download our Second Quarter 2020 Economic & Public Market Update
The second quarter was a challenging quarter on the economic front. The nationwide, COVID-related shutdown from the first quarter segued into the second quarter, and the Government issued an unprecedented fiscal stimulus package in order to keep the economy afloat. American job losses continued to reach numbers never seen prior to 2020, and the flow of money slowed (while personal savings increased to a record). As the quarter proceeded, state and local economies began to reopen, and consumers and businesses alike began to show some signs of life: jobs in hard-hit segments, such as hospitality, showed significant growth; manufacturer surveys optimistically showed expectations of growth; and both existing home sales and housing starts trended positively.
Despite the optimistic trends late in the quarter, the National Bureau of Economic Research did officially declare the US to be in a recession during the quarter, which is not surprising given then and current unemployment levels. And despite the positive trends, the reopening of economies has led to record new cases of the virus, threatening plans of a fast and full recovery. In fact, in mid-July, California Governor Gavin Newsom directed all 58 Californian counties to close bars, indoor restaurants, movie theatres, and wineries, and he further directed 29 counties to close gyms churches, salons, malls, offices, and other businesses. Such scaling-back plans could hamper growth in Q3 and Q4. Furthermore, certain stimulus expired at the end of July, namely the additional unemployment benefit payments of $600 a week. Congress is currently working on plans to extend CARES Act components to the tune of a rumored $1-3 trillion package. While this should buoy the economy further, any gaps between the expiration of the current program and the start of the next may be a painful period for many Americans and may only exacerbate economic hardship.
If there was ever a period in which the stock market seemed disconnected from the state of the economy, it was the second quarter. The stock market regained significant lost territory from the first quarter, and, in the NASDAQ’s case, reached all-time highs. The S&P 500 gained 20%, while the NASDAQ increased 30.6%. With this increase, valuations of public companies generally increased as well, and the market for initial public offerings recovered with the most proceeds in a quarter in the last year.
To read more about the economy and public market activity during the quarter, read our Second Quarter 2020 Economic & Public Market Update. In the coming weeks, we will also issue reports on second quarter capital markets activity, so be sure to subscribe to our newsletter below.
If you have any questions regarding broad capital markets activity, activity within your industry or geography, or if you would like to discuss options for your business, please contact us.