2020 is already a year we will never forget, and we still have one more quarter left which includes a presidential election. One of the most challenging parts of a rapidly evolving economic backdrop is keeping everything in perspective. As we enter the last stretch of 2020, understanding where we are is essential before looking forward to what is to come.
As a quick recap, when it became clear that COVID-19 was starting to spread uncontrollably in the United States, the S&P 500 fell 34%, which was easily the most massive sell-off since the financial crisis. However, unlike the last recession, which took years for the market to recover, this time, it only took a couple of months. Fueled by unprecedented government support in both fiscal and monetary policy, the overall market has roared back.
While the overall average return of the S&P 500 paints a robust picture of the U.S. economy, the underlying data reveals a more uneven recovery. As you might imagine, the global pandemic has devastated some industries while being a tailwind for others. In this next chart, you can see that many of the winners and losers make intuitive sense. Airlines, hotels, and energy companies have seen their values cut in half with travel nearly shutdown. On the other hand, online retail and home improvement have thrived and seen massive stock price gains.
Beyond the stock market, the data still suggests it will take until the end of 2021 to recover to pre-COVID GDP levels. Unemployment is recovering, but we remain at elevated levels, particularly for those with less formal education. In the past few weeks, we have seen some notable corporations finally have to layoff many of their employees as restrictions look like they will stay in place until the new year.
In the future, one of the most important indicators to watch will continue to be the rate of infection around the globe. As we get closer to potential vaccines, the hope is that we can keep the economy open enough without risking too many lives. Unfortunately, that has been easier said than done. Even places like Europe who thought they had quelled the virus are starting to see a resurgence again. If the virus continues at current rates or worsens and additional restrictions are put in place, the economy may require another round of stimulus if we want to stay on our current economic trajectory.
If you are interested in learning more about the economy's current state, we are hosting a webinar series beginning tomorrow. Feel free to sign up in advance or check our blog for the replays.
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