The last two weeks has seen more important developments related to the federal government’s response to the COVID-19 pandemic and its impact on the U.S. economy. Below is a summary of the most significant developments over this time period.

What Happened in the Markets?

For the two weeks ended Friday, May 15th, the S&P 500 gained 1.2%. As of May 15th, the S&P 500 has advanced almost 28% since its March 23rd low.

S&P 500 Index – As of May 15, 2020

Over the last two weeks, U.S. manufacturing activity fell to its lowest level since April 2009. Expectations for U.S. government borrowing for the year ending 9/30/2020 topped $4.5 trillion as a result of emergency relief programs related to the pandemic. Hopes rose as coronavirus vaccine testing entered the human testing phase in the U.S., but the virus cast a shadow over U.S.-China relations as both worked to expand global influence heading into a post-coronavirus environment. Demand for small business loans softened, as business owners waited for term clarifications of the Paycheck Protection Program, and some lost interest in the program for varying reasons. Worries about the European Union’s financial unity reemerged as divisions between northern and southern countries widened over coronavirus relief efforts. The Federal Reserved indicated that negative interest rates remain an unlikely last resort to stimulate the U.S. economy based on potential negative ramifications. The Fed also launched a new program to purchase corporate bond exchange traded funds to further stabilize credit markets. Inflation weakened for the second month courtesy of stay-home orders, lackluster demand for goods and services, and the impact of 36.5 million people left unemployed over the last eight weeks.

The Economic Outlook: Preparing for What’s to Come, as States Move to Reopen

As some states move to reopen their economies, while others take a more gradual approach throughout the summer months, the nation is waiting with equal parts anticipation and anxiety to see when the economy will get back on the road to recovery. Will the stimulus efforts by the government and Federal Reserve pay off? Will gradual reopening help get the economy back on track? Only time will tell.

New Stimulus Package Proposal

Earlier this week, House Democrats unveiled a new $3 trillion stimulus package to combat the economic downturn caused by the COVID-19 pandemic. The bill, which Democrats are calling the Heroes Act, would be the largest relief package in U.S. history. Some lawmakers have argued that another stimulus package is not yet needed as states begin to partially reopen their economies. The House is expected to vote late Friday, although the bill, if it passes the House, has a low likelihood of gaining traction in the Senate as currently written.

Understanding Coronavirus-Related Distributions (CRDs)

Stimulus checks aside, the CARES Act also provides economic relief to struggling Americans in the form of coronavirus-related distributions. Here’s a quick breakdown of what you should know:

What is a CRD?

A CRD is a distribution that is made from an IRA or employer-sponsored retirement plan to a qualified individual from January 1, 2020, to December 30, 2020. Qualified individuals are allowed to take up to $100,000 from all of their eligible retirement plans without incurring the normal 10% early-withdrawal penalty.

Do I still have to pay income taxes on a CRD?

Yes, but the law allows the income taxes from these distributions to be paid over three years.

Can I repay a CRD?

Yes, the law allows qualified individuals to repay any portion of the distribution amount within three years from when the distribution was received. If you pay income tax on a distribution and then later recontribute the funds to an eligible retirement plan, you will be allowed to file an amended tax return to recover the taxes paid.

Who qualifies for a CRD?

Under the CARES Act, you are considered a qualified individual if:

• You’re diagnosed with COVID-19 by a test approved by the Centers for Disease Control and Prevention (CDC).
• Your spouse or dependent is diagnosed with COVID-19 by a test approved by the CDC.
• You experience adverse financial consequences as a result of being quarantined, being furloughed or laid off, or having work hours reduced due to COVID-19.
• You experience adverse financial consequences as a result of being unable to work from lack of childcare due to COVID-19.
• You experience adverse financial consequences as a result of closing or reducing hours of a business that you own or operate due to COVID-19.

While a CRD can provide short-term financial relief, an early withdrawal from your retirement plan should be a last resort.

Moving forward, we will be discontinuing this bimonthly update, but you will continue to hear from us through our blogs, social posts, quarterly letters and special reports. In the meantime, please don’t hesitate to reach out to us directly if you have questions or want to discuss your financial situation.

Stay safe and be well,

Harris Financial Advisors


This update provides information that is accurate to the best of our knowledge as of the article date. This article should not be viewed as a substitute for consulting directly with financial, tax and legal advisors regarding your personal situation.