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Where we are now after lockdowns

Where we are now after lockdowns

| May 22, 2020
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Dear CP client,

Summer unofficially begins this weekend with Memorial Day! This year brings fewer public pool outings and more walks or picnics in small groups, as we honor those who have served this country.  

Phase II of lockdowns – Reopening 

Many states have begun lifting the lockdown restrictions that started in March, banking on the belief that the COVID-19 growth curve has been sufficiently “flattened” to be manageable by existing healthcare capacity until a vaccine is found.  

In our home state of Ohio, the governor has officially changed “Stay home” from a legal order to more of a recommendation. Elected officials are still urging caution, recommending continued work from home when possible, and encouraging those in public to wear masks to protect others. We haven’t seen updated guidelines on allowable crowd sizes. In Ohio: 

  • Restaurants can now host dine-in customers  
  • Low-contact recreational sports like baseball can resume on May 26 
  • Daycare centers reopen May 31 

While economic activity will occur with the lifting of lockdowns, we don’t expect to return to our country’s previous level of productivity for some time—possibly years. When everyone does get back to work, work will be different in ways we can’t quite imagine yet. 

Phase II economic data 

There are a few bright spots, but in general we expect new economic data will be bad to very bad for the next few months, primarily because 38.6 million people have filed jobless claims in the past nine weeks.  

  • Mortgage applications to purchase a home are almost back to 2019 levels, an impressive rebound. Existing housing inventory has dropped considerably, however.  
  • Consumer spending led the booming market over the past few years. In April, retail sales plummeted, declining by more than double the consensus estimates (change month over month). However, Google search data signal a possible rebound in May auto sales. 
  • Retail spending has taken a huge hit: 

In the markets: Those who follow the stock market closely will have noticed that stock prices have been rising despite earnings estimates falling. For twenty years these two variables have been closely correlated (.9, where 1 means moving in tandem in the same direction, and -1 means they move in opposite directions). In the last two months, the relationship has flipped to show an astonishing -.9 correlation.  

What does this mean? Well for starters, prices and earnings can’t be negatively correlated forever; at some point they will move together again. Whether that means stock prices falling to match low earnings, or prices staying static while earnings catch up (which would take months or years), remains to be seen. 


Acknowledgements: Thank you to Liz Ann Sonders, the Wall Street Journal, Axios, and Fortune for the economic data and charts. 

We want to hear your thoughts! Respond to this email to let us know you want more or less of this kind of update, and if there’s anything you need from us. You can also see all our market emails on our blog: Visit and share with your interested friends.  

Have a wonderful weekend and we look forward to seeing you again soon. 

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