We hope that everyone is staying safe and healthy. We understand that this may be a period of stress and anxiety for you and your loved ones; please be assured that we are here as always to help you navigate your way. We will keep you updated as quickly as possible regarding what is happening in the markets, our perspectives and actions that we are taking in response. Please do not hesitate to reach out with any questions or concerns you may have.
Unpredictable Growth Projections Ahead
Given the current situation, it is unclear what lies ahead for GDP or corporate earnings. We do believe that the underlying structure of our economy is sound, and we are heartened by the resiliency of the American people in the face of the current crisis. Healthcare, public safety and other professionals, including those manning grocery stores, pharmacies and other essential services, are stepping up in this time of need. Large corporations and small businesses are providing needed supplies and facilities to aid local governments in their efforts. We at Klingenstein Fields Advisors (KF Advisors) are also committed to doing our part to help the community in any way possible.
Health Care Companies Step Up Efforts
In the effort to combat the virus and reduce the impact of its spread, pharmaceutical companies and the many research scientists supported by the National Institutes of Health are suggesting therapeutic remedies or possible solutions based on their current research and in some cases are redirecting their research to meet the current crisis. Some potential vaccines are already in testing, although discipline and process are still being carefully followed.
Cost of Support
The total cost of the stimulus programs could reach $5 trillion dollars before year end. In comparison, the total GDP of the United States is currently about $22 trillion, and our national debt is currently about $23.5 trillion. The concern in adding $5 trillion of debt is that it could lead to inflation and higher interest rates. However, ten years of global government stimulus and spending—including here at home—has not had that result, even despite efforts of governments to raise inflation and rates.
We believe that the underlying foundation of the U.S. economy remains solid and that the stimulus programs being contemplated are both necessary and will succeed. Our focus remains on owning high-quality investments in order to provide strong long-term growth.