After years of market stability, 2020 was the year of curveballs. Oddly enough, we are ending pretty close to where we started the year. We are in a bull market, with stocks ending on a high note. But, as we all know, that’s not what the whole year looked like.
Here is a look back at the most noteworthy financial moments from 2020, and what we might expect in 2021:
2020 Financial Review: Record market recovery
The stock market plummeted in March as the coronavirus began to surge in the U.S., but it made a pretty remarkable 65% comeback. The S&P had its shortest-ever bear market of only 33 days, and went right back to a bull market. We are even on track to end this year up over 10%.
The markets showed a resiliency that most experts didn’t expect. Part of that was thanks to the stimulus package and rapid vaccine development that bolstered investors’ confidence.
The Federal Reserve had a big hand in that recovery, too. The Fed cut interest rates down to almost zero in March, along with backing loans needed to help keep businesses going.
Time will tell whether the late 2020 stimulus package will be enough to keep the economy chugging along through the winter.
Economic hardship despite market strength
A thriving market is something to appreciate, especially at the end of a year like 2020. But that doesn’t mean it’s been an easy year for people financially.
Unemployment is still on the rise, with an uptick of nearly 5 million more people without jobs since March. Many people are still reeling from the effects of a cut in income. Data from Yelp showed that as of September, more than 160,000 U.S. businesses closed during the pandemic.
Several industries were also badly wounded in 2020, and they may or may not recover. Service, restaurant, event and travel industries were some of the hardest hit, and their recovery will depend on how and when we can resume pre-pandemic activities.
No one is sad to see 2020 go, but 2021 is still a wildcard. The development of three effective vaccines is an important step in moving on from the pandemic, but what that means economically is something we’ll have to wait for.
Even as vaccines roll out, Covid-19 cases continue to surge. A shaky first quarter is expected, but this spring and summer could lead to growth in spending as more people get vaccinated.
Better days are ahead, but we’re not out of the fog just yet. In the meantime, continue to plan for your year and make adjustments as needed.
Do you need help getting your finances organized? Contact me today to set up a meeting to talk about your goals. You can also download my free ebook for physicians for tips and information about getting your finances on track.