Every quarter, Canterbury's Outsourced CIO committee shares their observations of the market that impact the management of our discretionary portfolios in the Canterbury Outsourced CIO Commentary.
With less than three months left in 2020, this year has proven to be most unusual. COVID-19 related restrictions truly “hit home” globally, forcing individuals worldwide to readjust their physical, psychological, and social lifestyle for most of this year. This will likely continue for some portion of 2021. The rapid adaptation of working remotely, virtual gatherings, and contactless transactions may redefine “normal” activity for the long term in many industries, but widespread business closings and disruptions in supply chain within other industries are also very visible outcomes of the social distancing requirements.
The U.S. posted year over year GDP declines of 5% and 35% in the first two quarters of 2020, signaling that the economy was in an economic recession during the first half of 2020. During the third quarter, most states moved towards partial openings and estimates are for the nation’s GDP to be positive for the third quarter. Unemployment, which peaked at close to 15% in April 2020 fell to 8.4% in August. At the same time, though, the year-over-year increase in CPI was 1.3%, which is high for a period of recession. This “inflationary” pressure largely resulted from the stimulus placed in the hands of businesses and consumers and was supported by the basic laws of supply and demand. The price of necessities that people are buying has increased, while items deemed not “essential” during this time, have seen their prices fall.