There has been nothing mundane about the year 2020.  Maybe not everyone sees it this way.  I have heard of people just sitting inside their apartment for many months because there’s not much open or because they are terrified of a virus.

My life has carried on somewhat normally, but I am past the stage of my life where I go out to bars or bowling or any number of things.  I didn’t even go to movies much.  The things that changed for me in 2020 were working from home regularly, not eating a dinner out on the weekends, and my kids not having as much in the way of activities.  I am still working at home, but we do go out to dinner about once every other week, and my kids’ activities have somewhat picked up.

It hasn’t been a boring year though.  It has been devastating for many.  It has been sad and depressing for people who are lonely and in need of interaction.  It has been a lot of things, but boring doesn’t describe it for me.  I never would have thought back in February that I would feel like I’m walking in a hospital when I go to the grocery store.  I never would have thought that the American people would so easily roll over to the dictates of governors and mayors shutting down businesses.

Anyway, here we are. I don’t think there is much controversy in saying that we are in a recession or we had a recession in 2020. But it really is a recession like no other.

First, the recession itself isn’t really the story, or at least it isn’t the one getting the headlines.  We’ll see headlines all over the place about COVID deaths or hospitalizations, yet we don’t see tickers of the number of businesses closed down that are never coming back.

Second, this recession is marked by a boom in the stock market.  There was a scary drop in March and April for stock investors, but stocks have mostly boomed since then.  The Nasdaq in particular blew past its all-time highs in the face of a major recession.

Who would have guessed that the Fed would expand its balance sheet by nearly $3 trillion over the course of just a few months?  I knew the Fed would be aggressive in the next recession, but it really is amazing the unprecedented actions taken.

While I am happy there is still some federalism left, it isn’t enough.  The governors and mayors locked things down, but the financial burdens didn’t fall on them.  The local and state governments haven’t officially been bailed out, but they really have.  The federal government passed a $2 trillion bill for business bailouts, unemployment checks, and stimulus checks.

If we had a strong federalist system, none of that would have happened.  Why should the taxpayers of South Dakota (where there was no state lockdown) have to pay for failed businesses in New York where the lockdowns and restrictions have been steep?  The governors and mayors should be held responsible by their own constituents for these decisions.

A Recession Anyway

One of the really frustrating things for me – and there are many – is that the Fed and the federal government aren’t taking the blame for this recession.  Instead, we hear it was the fault of the coronavirus. The more astute may say that it was the fault of the lockdowns in response to the coronavirus.

While the lockdowns certainly brought on the recession quickly, I believe that one was going to happen anyway in 2020, but I guess we’ll never know.

If you remember all the way back to boring 2019, the Fed was having to step in to save the repo market from spiking interest rates.  We also saw an inverted yield curve as measured by the 10-year yield vs. the 3-month yield.  This has been an accurate predictor of recessions, and I guess we could say it was again. But we’ll never know for sure if we would be in a recession right now if there had been no coronavirus fear and lockdowns.

This is what is particularly alarming about our economic state now.  We were already set up for a recession, and lockdowns across the country were added to that equation.  Now we have trillions of more in debt and a further ballooning of the Fed’s balance sheet.

I believe there is still major trouble ahead.  But it is impossible to predict how this will all unfold.  There are even more variables now than before with so much power given to politicians at all levels.  Will the ultra easy money delay more economic recession in the year to come?

There are tens of millions of Americans struggling financially.  This includes hundreds of thousands of business owners and millions of people who have lost their job.  There are also a lot of people with reduced hours and reduced pay.  Meanwhile, prices are going higher with all of the Fed’s inflation.

If Trump loses the election or is forced out in January 2021, then Biden (or maybe Harris) becomes president.  While that isn’t comforting, there could be a benefit to a Biden presidency when the economic manure hits the fan.  I’m sure the establishment media will still be blaming Trump, but it will fall on Biden.  It makes it harder to blame capitalism, even though we don’t have anything close to free markets now.

We’ll never know if a recession would have happened anyway in 2020.  But what we do know is that we are in much worse shape now than we were a year ago.  Americans should prepare for a reduced standard of living.  There will be exceptions.  There always are.  But the vast majority of people are going to see major economic turmoil still to come.