States announce full go, how that impacts the economy
LEXINGTON, Ky. (WKYT) - This past week some states have begun to announce a full re-opening with no restrictions in place. Indiana and Florida both announced no capacity restrictions in restaurants, Florida even removed the requirement of wearing facemasks. To evaluate the economic meaning of the rollback and if other states will soon follow, fiduciary financial planner Josh Smith of Strategic Wealth Designers joined the newscast. He says to expect a domino effect of other states following suit in the next month or so.
“Right now Indiana and Florida are saying we are open for business and we’re confident you can come out and spend your money in the state safely,” Smith says. “For a tourist destination like Florida, this will certainly jump-start the economy faster. To see the stock market truly react it will take more than 2 but states are competitive in nature so don’t be surprised to see more follow soon.”
The converse of opening up is the potential for coronavirus cases to jump as people potentially let loose after being restricted for about 6 months. Smith says it’s a balance more and more states will be willing to juggle.
“There’s always a risk, especially with those who are elderly or have pre-existing conditions,” Smith says. “Until there is a vaccine there will be a continued concern of coronavirus exposure, hopefully, the death rate stays low and goes evener lower.”
For the economy of the states that are opening, they can expect a major burst in spending. Smith says when the government and local health authorities give the blessing of opening, that signals a message of safety to those living in the areas. Many have held money on the sidelines waiting to see exactly how long the pandemic will go. With the green light given, jobs and spending should jump in places like Indiana and Florida.
“If more and more states start coming online in a full capacity, the stock market is going to react favorably,” Smith says. “The market wants to front-run which direction the economy is heading and if it sees an opening trend that will bode well for consumer spending and job re-hiring. It will also put greater pressure on neighboring states who aren’t open in the same capacity to consider their restrictions and potentially equal the level their neighbors are operating at. We’ve already seen that happening as states went from one phase to the next and others followed closely behind in the phased re-opening.”
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