It was the best of times, it was the worst of times.
Cross-posted from The Great Recession Blog.
It was the best of times, it was the worst of times. April closed as the best month for the US stock market since the V-shaped recovery that followed the Black Monday stock market crash of 1987. April also delivered the deepest, broadest economic collapse of any month in history.
The economic collapse was simultaneously global. What is written here about the US can pretty well be said for all nations in the world. The collapse crushed jobs, personal income, consumer spending, consumer sentiment, car sales, and general economic activity more than any month in the history of the nation. Some of those sharpest declines happened in March, but April relentlessly drove them to greater depths. Yet, stocks rose.
It stomped the housing market into the dust and pushed oil prices deeper down the wells of Texas than anyone ever imagined was possible. It also set up the world for potentially serious food shortages in the summer, as farming, processing and delivery all collapsed due to lack of labor under the intense social restrictions of the coronacrisis — the first global quarantine in the history of the world. And stocks still rose.
Perhaps we should call this Black April, though March was worse in many ways. It’s just that the economic collapse kept on getting deeper in April. Yet, stocks had their best month in more than thirty years. That’s incongruity on a massive scale — the greatest economic denial in history.
The first-quarter decline in GDP came in at -5%, but the monthly decline in April was far worse. Though we don’t have the specifics, we know that half of the first quarter was, to the best everyone knew, virus-free in the United States. Viral lockdown was not even a thought. April alone, probably brought GDP down more than another 5%. Still, stocks rose…