Now that businesses are reopening in Texas and across the country, will consumers feel confident enough to venture out and spend money?
“If we feel good about things. If we feel good about our jobs. If we feel safe to go on vacation, etc., we will go out and consume,” he says. “Until we get there, I think consumption will be muted to some degree.”
Even as businesses reopen, Mathews thinks about half of those temporarily furloughed will find themselves permanently unemployed.
“By the end of the year, you still might have 10 percent unemployment,” he says. “So clearly, economic activity will not rebound at the same speed that you're seeing the stock market rebound.”
Mathews says while the stock market's rebound may look like a 'V,' the overall all economy may look more like a Nike swoosh.
The bigger question, he says, is whether Congress will extend COVID-19 benefits beyond July 31. “If they're exhausted and terminated, will we see another decline of 20 percent in consumption, which is typical as one loses those unemployment insurance benefits.”