(WEHT) — Last week, the U.S. Bureau of Labor reported the unemployment rate for April rose to nearly 15% – that’s the highest since the Great Depression.
Eyewitness News spoke with Spencer McGowan of McGowan Group Asset Management in Dallas Monday about the state of the economy and when could things get better.
Brandon Bartlett: Spencer, thanks for being with us tonight. A new report says that the economy lost around 22 million jobs in April; that is the steepest plunge in payroll since the Great Depression. What effect has that had on the economy?
Spencer McGowan: Well, you’re gonna be a -28% annualized for this quarter. Last quarter was -5% annualized, then the projections are really important because when you start to bounce back from that, you’ve got a 10% projection for the third quarter. So if we look at Q3 +10%, maybe as much as +20%, depending on how the reopening goes. So you start to hire back those people in May. A tale of two waitresses I think you will enjoy, my stepdaughter and her best friend are waitresses, they got more money from unemployment and their stimulus checks than they’ve ever had in their checking. One of them’s back to work, and one of them goes back to work in about 10 days. So about a third of those jobs are restored, probably just in May, based upon other evidence that we have.
Brandon Bartlett: That’s interesting. Yeah, I was gonna ask, what are you seeing? Is there any indication what the numbers might be like for May?
Spencer McGowan: You know, I believe you’re going to be by the end of the month, potentially a plus 7 million, optimistically, maybe as many as 10 million jobs restored, June and July, maybe another 7-10 million. And the rest are sticky. You know, they may take a year to a year and a half to replace, you know, which puts you out towards the end of 2021. For a potential record employment, that would be 157 million people employed, which is where we were before the the shutdown.
Brandon Bartlett: Now, your job is to keep an eye on the stock market. How would you describe the market right now?
Spencer McGowan: Well, obviously troubled for those that own financial assets. It’s a lot like people who had real estate in 2008/2009 – real estate went down by half, the Dow went from 29, over 29,000 to just above 18,000. Now about 24,000, that’s the midpoint. That’s no accident as we look forward to a reopening, you’re gonna have a trading range for an extended period, because it’s unlikely the Dow gets back to a record until 2023. So part of that guidance is to say, Okay, what do we do in the meantime, to gain advantage by the time we get out to 2023, 2025 when we hope this is a distant memory?
Brandon Bartlett: Yeah, what are you telling your clients about what they should be doing with their money right now? Should we be buying or selling?
Spencer McGowan: You know, the 401k plans and this is part of our service. We go into a 401 K, we look at allocations, and part of it is when when you’re contributing right now, you’re buying blue chips at a discount for the equity portion. For the bond portion, we like the corporate high yield better because the Fed injecting 2 trillion, the Treasury borrowing 3 trillion to make sure that there are not massive defaults and a massive catastrophe later on. Those two stimuluses probably overcome a big part of the trouble.