Federal and state governments began coordinating preparations for reopening this week. While stock markets are forward-looking and have experienced gains from the recent bottom, it’s important to temper expectations about the economy until the COVID-19 outbreak has been brought under greater and more sustained control.
Another 5.2 million Americans filed for unemployment benefits, bringing the total to more than 22 million during the past month. This represents approximately 14% of the U.S. workforce – an extraordinary number. First-quarter corporate earnings reports began this week. Several of the largest banks reported dramatically lower profits while setting aside huge amounts of money to cover expected loan defaults.
Political leaders across the country continue to weigh public health concerns with the need to resume economic activity. The White House released its Guidelines for Opening Up America Again, which offered specific criteria for states to move through three phases on the path to a “new normal.” Hope for a partial return to work helped markets to close up modestly for the week: The S&P 500 Index gained 3.0%, while the Dow Jones Industrial Average advanced 2.2%.
At Planning Alternatives, examples of how we continue to help clients navigate the financial effects of the coronavirus crisis include:
- Completing Roth conversions when appropriate. This results in paying income taxes on converted amounts in 2020, but funds are placed in a Roth IRA for tax-free future growth.
- Discontinuing required minimum distributions when they’re not needed for regular income, which reduces personal income taxes owed in 2020.
- Rebalancing accounts that have drifted away from their targeted asset allocation, typically selling bonds to purchase stocks.
As we all navigate through this pandemic, our commitment remains to be here for you every step of the way. Stay safe and please feel free to contact us with any questions you have about the economy and your portfolio.