The news that President Donald Trump and first lady Melania Trump had tested positive for COVID-19 is “one more element of uncertainty in an uncertain environment,” said David Kelly, chief global strategist for J.P. Morgan Global Asset Management, on Friday during the bank’s quarterly outlook call.
But “when dealing with this pandemic, we need to think about the science, the numbers, the probability in order to invest through this,” he said.
Due to Trump’s age, gender and preexisting conditions, “there is fear this could be quite dangerous for the president,” he noted, adding that the diagnosis adds trauma to a “traumatic election season.”
However, he cautioned that “we need to think rationally about this,” saying the most likely scenario was that Trump would recover and that his illness would likely not “in a dramatic way affect the landscape” of the election.
Along with this comment, Kelly went on to postulate what the economy would look like going forward.
“The economy has recovered some” since the pandemic started, he said, noting high-frequency indicators of more people using restaurants, buying houses or making credit card purchases than in April. But those numbers are still down from last year.
“The good news,” he added, is that is after the GDP came crashing down the first two quarters, it should rise in Q3, but he sees an “interrupted V” shaped recovery. He added that there probably will be a “screech to a halt” with the GDP in Q4.
Unemployment numbers paint a more dramatic picture in which the United States lost 22.2 million jobs between February and April, “an astonishing number,” Kelly said.
We’ve regained 11.4 million of those jobs, but “we need another 10.8 million jobs to get back to where we were,” he said. “It’s a lot like jumping off a cliff to a trampoline. The bounce is impressive, but the fall is dramatic.”