Money for The Rest of Us

Investment help and financial guidance for the rest of us.

  • Podcast
  • Guides
        • Asset Classes

        • A Complete Guide to Investing in I Bonds and TIPS (2025)
        • A Complete Guide to Equity REIT Investing
        • A Complete Guide to Mortgage REIT Investing
        • A Complete Guide to Investing in Gold
        • A Complete Guide To Investing In Convertible Bonds
        • Investing in Bitcoin, Oil, and Volatility ETFs
        • Carbon Investing and its Effect on Climate Change
        • Farmland Investing
        • The Opportunity and Risk of Frontier Markets
        • Investment Vehicles

        • A Complete Guide to Investment Vehicles
        • How to Invest in Closed-End Funds
        • What Are SPACs and Should You Invest in Them?
        • Money and Economics

        • A Complete Guide to Understanding and Protecting Against Inflation
        • Understanding Web3 Investing
        • Strategy

        • Why You Should Rebalance Your Portfolio
        • What Is Risk vs Uncertainty?
        • Tail Events and Tail Risk
  • Resources
        • General Resources

        • Topic Index
        • Glossary
        • Most Influential Books
        • Member Tools

        • Member - Getting Started Guide
        • Asset Allocation and Portfolio Tools
        • Current Investment Strategy Report
        • All Investment Conditions Reports
        • Strategic and Adaptive Model Portfolios
        • Member Tools and Downloads
        • Member Resources

        • Plus Premium Episodes
        • Submit A Question to the Plus Podcast
        • Member Forums
        • David’s Current Portfolio
        • David's Portfolio Trades
        • Courses

        • Investing in Closed-End Funds
  • Members
  • Join
  • Log In
You are here: Home / Podcast / 310: Why the Stock Market and Economy Are Rebounding So Quickly

310: Why the Stock Market and Economy Are Rebounding So Quickly

August 19, 2020 by David Stein · Updated July 30, 2022

How the current global recession differs from the Great Financial Crisis and why the recession is probably over.

Edge of a forest. Text says "Rebounding Markets."

Topics covered include:

  • Why the current recession has no debt and banking crisis
  • Why lower-income workers are disproportionally harmed by the current recession
  • How the federal government and central bank responses differed between the current recession and the 2008–09 recession.
  • Do increased unemployment benefits disincentivize workers
  • Why the recession is probably over but it could take months or years to recover the lost output
  • What factors will determine the impact a COVID-19 vaccine will have on the economy

Show Notes

Employment Situation Archived News Releases—U.S. Bureau of Labor Statistics

Opportunity Insights Economic Tracker

Income and Poverty in the United States: 2018 by Jessica Semega, Melissa Kollar, John Creamer, and Abinash Mohanty—United States Census Bureau

America’s huge stimulus is having surprising effects on the poor—The Economist

Safety net programs and poverty during the COVID-19 crisis by
Jeehoon Han, Bruce D. Meyer, James X. Sullivan, Marianne Bitler, Hilary W. Hoynes, and Diane Whitmore Schanzenbach—Brookings

Trump’s unemployment extension may only provide three-week boost, federal guidance reveals by Tony Romm—The Washington Post

Employment Effects of Unemployment Insurance Generosity During the Pandemic by Joseph Altonji, Zara Contractor, Lucas Finamor, Ryan Haygood, Ilse Lindenlaub, Costas Meghir, Cormac O’Dea, Dana Scott, Liana Wang, and Ebonya Washington—Tobin Center for Economic Policy Yale University

HOW ARE SMALL BUSINESSES ADJUSTING TO COVID-19?
EARLY EVIDENCE FROM A SURVEY by Alexander W. Bartik, Marianne Bertrand, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, and Christopher T. Stanton—NATIONAL BUREAU OF ECONOMIC RESEARCH

Thinking through the economic consequences of a vaccine by Neil Shearing—Capital Economics

Estimating mortality from COVID-19—World Health Organization

Estimating the infection fatality risk of COVID-19 in New York City, March 1-May 16, 2020 by Wan Yang, Sasikiran Kandula, Mary Huynh, Sharon K Greene, Gretchen Van Wye, Wenhui Li, Hiu Tai Chan, Emily McGibbon, Alice Yeung, Donald Olson, Anne Fine, and Jeffrey Shaman

Episode Sponsors

Chili

Trends

Become a Better Investor With Our Investing Checklist

Become a Better Investor With Our Investing Checklist

Master successful investing with our Checklist and get expert weekly insights to help you build your wealth with confidence.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Related Episodes

291: How To Survive the Coronavirus (COVID-19) Shutdown

298: The Stock Market Is Not the Economy

305: Are Banks Safe?

Transcript

Welcome to Money for the Rest of Us. This is a personal finance show on money, how it works, how to invest it, and how to live without worrying about it. I’m your host, David Stein. Today is episode 310. It’s titled, “Why the Stock Market and Economy Are Rebounding So Quickly.”

Is It Really A Recession?

Last week LaPriel and I and our daughter drove 20 miles from our house to hike the Cascade Creek Trail in the southern part of Yellowstone National Park. We went to Terrace Falls along the Fall River. Took about 2.5 hours. We saw 6 people the entire time. But then we decided to take the long way home through Grand Teton National Park. And I was absolutely amazed at how many people there are. When we drove past the Jenny Lake Lodge and Visitors Center the parking lot was full and there were cars parked along the main highway. Dozens and dozens of cars. I have never seen this many campers and RVs in this part of Idaho. 

In some ways, it doesn’t feel like a recession. A recession is an extended period of economic retraction. When the dollar value of goods produced and services provided within an economy is shrinking. Of course, it especially doesn’t feel like a recession given the S&P 500 Index, a measure of US stocks, has closed near an all-time high. I talked about that aspect a few episodes ago in an episode titled “The Stock Market is Not the Economy.”  But the economy is also different during this recession than it was during the Great Financial Crisis.

We’re clearly in a recession. US Gross Domestic Product fell at a 32.9% annual rate in the second quarter. After falling at a 5% annual rate in the first quarter. On June 6th, 2020 a committee of the US Bureau of Economic Research officially declared the US was in a recession. 

In this episode, we’re going to explore how this global recession differs from the Great Financial Crisis of 2008 and 2009. And what could develop going forward. 

No Debt Crisis

There are four major ways that this current pandemic induced recession differs from the Great Financial Crisis of 2008/2009. The first is this recession was indeed caused by a pandemic lockdown. Essentially putting the global economy into a coma in order to try to flatten the curve. The spread of COVID-19. That contrasts with the Great Financial Crisis where the recession was really caused by a debt and banking crisis. 

Heading into the 2001 recession, US total household debt to GDP was 70%. And household mortgage debt to GDP was 47%. Then we had a housing bubble. Total household debt to GDP peaked at 98.1% in the summer of 2008. An increase of 28 percentage points. Household mortgage debt to GDP peaked at 73% compared to 47% 6 or 7 years earlier. Then we had the crisis and we’ve had a debt gauge where debt levels have been paid down. At the end of Q1 2020 household debt to GDP was down to 76% compared to its peak of 98%. And mortgage debt to GDP is at 49%, close to where it was in 2001. 

Households were better prepared as we entered into this recession by having more savings and lower debt levels. Banks were also better prepared. In episode 305 “Are Banks Safe?” We explored how banks are much less leveraged and have a much greater capital buffer than they did prior to the Great Financial Crisis. Banks are much better prepared this recession than they were for the Great Financial Crisis. Regulations are more stringent and so we’re not having a debt and banking crisis. 

As a Money For the Rest of Us Plus member, you are able to listen to the podcast in an ad-free format and have access to the written transcript for each week’s episode. For listeners with hearing or other impairments that would like access to transcripts please send an email to jd@moneyfortherestofus.com Learn More About Plus Membership »

Ready to get serious about your investing?

Access professional-grade portfolio tools, training, and a community to help you stay on track, tune out the noise, and grow your wealth with confidence.

Learn How

Filed Under: Podcast Tagged With: central banks, COVID-19, pandemics, precautionary principle, recessions, vaccine

Contact | Team | Topic Index


Darby Creek Advisors LLC
P.O. Box 68544 • Tucson, AZ • 85737

Copyright © 2025 • Disclosures, Privacy Policy, and Cookie Policy • Site by Tempora

Manage Cookie Consent

We use cookies to optimize our website, marketing, and services. 

Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage {vendor_count} vendors Read more about these purposes
View preferences
{title} {title} {title}
Manage Cookie Consent
We use cookies to optimize our website, marketing, and services. We never sell users' data.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage {vendor_count} vendors Read more about these purposes
View preferences
{title} {title} {title}