As we all know, last year governments shut down various economies creating a recession in response to COVID 19. The second quarter of 2020 saw the worse decline in the economy ever, including the Great Depression.
Then parts of the economy opened up and the third quarter saw the greatest economic increase in history. Stocks soared led by certain sectors while parts of the economy still struggled. And these parts of the economy continue to struggle. Below illustrates this strange recession and recovery showing the parts of the business and stock market which prospered and lagged in the recovery the last half of 2020.
Some of the laggards have begun to show a spark of life, but many are still struggling. The hope is that with the deployment of vaccines and hopefully achieving herd immunity later in the year, these industries and the parts of the stock market they represent will start recovering over the course of the year. With two vaccines already approved, the process of distribution has started, though it is slow as there are so many to vaccinate and some are waiting to be vaccinated. There are many other vaccines in the late stages of trials, so hopefully more will be approved leading to a quickening of the rate of vaccination in the US and around the world.
With vaccines currently being distributed to the most vulnerable populations, we should begin to see death rates starting to fall instead of climb, which will lessen fear and hasten the time that this strange recovery morphs into a more normal economic expansion.