When we started 2020, we believed the economy was strong. This recession wasn’t caused by deteriorating economic fundamentals. Rather, COVID-19 and its subsequent severe disruptions to our daily lives triggered the recession. If you rewind to late February and early March, disruption and uncertainty peaked because we didn’t know much about COVID-19. We had limited information on how it was transmitted, who was vulnerable, or how to treat and prevent it. Because we were flying in the dark, we resorted to a combination of broad stay-at-home orders and closures as a best defense.

This abrupt slowdown in activity carved a deep economic and market valley. Growth plunged in the second quarter, which caused the U.S. stock market to fall from record highs on Feb. 19 into a bear market (down 20 percent) at a record pace — just 16 days — before ultimately reaching the bottom, down 34 percent, on March 23. Extreme pessimism prevailed at the time, but through it all we expressed optimism that monetary and fiscal policymakers would act to fill the valley, the economy would adapt and markets would eventually push higher. In our Q1 commentary, we wrote:

“Even in the face of the uncertainty … we are optimistic that this bear market may be unique relative to the prior two bear markets. So far it has proven to be unique in its pace to the downside; we believe the same could be true on the flip side.”

During Q3, economic growth snapped back at a torrid pace, and it appears the U.S. economy indeed logged that oft-discussed V-shaped recovery. And this action was reflected by a similarly robust recovery in the stock market, especially by companies positioned to thrive as people continued to spend but in different ways from home.

Economic growth stormed back as the U.S. economy adapted to a “new normal” amid COVID-19. The economic displacement of Q1 and Q2 has been transformed into economic replacement in Q3.

As we head into the final quarter of the year, the four-milestone roadmap we laid out in our Q1 commentary has also proven prescient. The depths of the economic valley were filled by aggressive monetary and fiscal policy both here and abroad. The width of the valley (or duration of the crisis) has lessened as our knowledge of the virus grows. That’s allowed us to adapt and re-open large swaths of the U.S. economy even while the virus continues to pulse around the planet.

Finally, doctors are getting better at treating the virus; and a viable vaccine, according to congressional testimony from health experts, looks like it could be broadly available to Americans by late spring or early summer 2021. That doesn’t mean we’re out of the woods, but with each passing day the sun shines a little brighter through the tree canopy.