The kids are starting to head back to school. Whether online, in person, or a combination of both, the process of children learning is coming back to life. Some parents are lamenting the “end of Summer” even though there are technically 4 more weeks of Summer, and even though the kids have been out of school for the most part since March. Perhaps such lamentation is a sign that things are starting to get back to normal.

Get A Move On

“Back to School” is part of the process of moving forward with life. Not just for the kids, but for parents as well. School is not just a place to go and learn, or at least be taught. For parents, it is also a place where their children go during the day so that the parents can go to work. This is especially true for young families. “Back to School” has the double benefit of increasing economic output because working parents are able to work more if their children are actively engaged in school. The lives of children and parents alike have been on hold since the onset of Covid. Let’s hope both can start to get a move on with their lives if the children can get back to school and stay back at school, meaning schools aren’t forced to re-shut back down due to a relapse of Covid.

Lagging Indicator

If all goes well, which is a big If, look for economic output, as measured by GDP, to improve at a steeper lever during the remainder of this year and the beginning of next. Perhaps this could also lead to the reopening of some businesses that have been shuttered not so much due to the threat of getting Covid at those businesses but more because sales had dried up due to the pandemic. Drycleaners, for instance: Who needs starched shirts if they are not going into the office and meeting clients? However, if people are able to go back to work in person, perhaps the need for dressing up will perk up again, which in turn will put more people in the drycleaning industry back to work. That’s just one example. Even if Covid remains with us, it is important that schools remain operative so that the general economy can get back to a relatively normal footing.

Perception vs. Reality

Despite what you read about or see in the media, I think most people are on board that Back to School is very important and should move forward. The media will always give air time to the loudest voices, but I am keeping my fingers crossed that cooler heads will prevail. Evidence is showing that children are less likely to get sick from Covid than will olders, and that teachers are no more likely to get Covid than are the general population. If so, there is minimal or no marginal Covid risk from having schools open. Let’s hope that the media doesn’t take the poor people who unfortunately do come down with Covid through school and blow the situation out of proportion and lead to widespread shutdowns in the school system.

IMO

Stock investors will be keeping a keen eye of what develops during the course of this Fall semester. While it might be a lagging indicator, stock investors, forward-focused as they are, will interpolate trends in whether or not schools remain open to mean that GDP growth will be greater or less than previously estimated, and buy or sell stocks accordingly. This means that the school year will likely add to the already high volatility in stock prices. Look for the VIX to remain high.