Category: For Buyers

Tomorrow morning the Bureau of Labor Statistics will release the latest Employment Situation Summary, which will include the most current unemployment rate. It will be a horrific number. Many analysts believe unemployment could be greater than 20%. These numbers represent families across the nation that are not sure when (or if) they will return to work. The emotional impact on these households is devastating.

There are, however, some small rays of light shining through on this issue. Here are three:

1. The actual number of unemployed is less than many are reporting

The number of people unemployed is sometimes over-exaggerated. It seems that every newscaster talks about the 40+ million people “currently” unemployed. It is true that, over the last ten weeks, over 40.7 million people have applied for unemployment. It is also true, however, that many of those people have already returned to work or gotten a new job. The actual number of people currently unemployed is 21.1 million. This is still a horrible number, but about half of what is often being reported.

2. Of those still unemployed, most are temporary layoffs

Last month’s unemployment report showed that 90% of those unemployed believe their status is temporary. Friday’s report will probably show a decline in that percentage as the original number was somewhat optimistic. However, a recent survey by the Federal Reserve Bank showed that employers believe over 75% of job losses are temporary layoffs and furloughs. This means 3 out of 4 people should be returning to work as the economy continues to recover.

3. Those on unemployment are receiving assistance

According to a recent study from the Becker Friedman Institute for Economics at the University of Chicago, 68% of those who are eligible for unemployment insurance receive benefits that exceed lost earnings, with 20% receiving benefits at least twice as large as their lost earnings.

Bottom Line

Tomorrow’s report will be difficult to digest. However, as the nation continues to reopen, many of those families who are impacted will be able to return to work.

With the U.S. economy on everyone’s minds right now, questions about the country’s financial outlook continue to come up daily. The one that seems to keep rising to the top is: when will the economy begin to recover? While no one knows exactly how a rebound will play out, expert economists around the country are becoming more aligned on when the recovery will begin.

According to the latest Wall Street Journal Economic Forecasting Survey, which polls more than 60 economists on a monthly basis, 85.3% believe a recovery will begin in the second half of 2020 (see graph below):There seems to be a growing consensus among these experts that the second half of this year will be the start of a turnaround in this country.

Chris Hyzy, Chief Investment Officer for Merrill notes:

“We fully expect the economy could begin to pick up in late June and July with a strong recovery in the fourth quarter.” 

In addition, five of the major financial institutions are also forecasting positive GDP in the second half of the year. Today, four of the five expect a recovery to begin in the third quarter of 2020, and all five agree a recovery should start by the fourth quarter (see graph below):

Bottom Line

The vast majority of economists, analysts, and financial institutions are in unison, indicating an economic recovery should begin in the second half of 2020. Agreement among these leading experts is stronger than ever.

One of the biggest questions we all seem to be asking these days is: When are we going to start to see an economic recovery? As the country begins to slowly reopen, moving forward in strategic phases, business activity will help bring our nation back to life. Many economists indicate a recovery should begin to happen in the second half of this year. Here’s a look at what some of the experts have to say.

Jerome Powell, Federal Reserve Chairman

“I think there’s a good chance that there’ll be positive growth in the third quarter. And I think it’s a reasonable expectation that there’ll be growth in the second half of the year…

So, in the long run, I would say the U.S. economy will recover. We’ll get back to the place we were in February; we’ll get to an even better place than that. I’m highly confident of that. And it won’t take that long to get there.”

Nonpartisan Analysis for the U.S Congress

“The economy is expected to begin recovering during the second half of 2020 as concerns about the pandemic diminish and as state and local governments ease stay-at-home orders, bans on public gatherings, and other measures. The labor market is projected to materially improve after the third quarter; hiring will rebound and job losses will drop significantly as the degree of social distancing diminishes.”

Neel Kashkari, President, Minneapolis Federal Reserve Bank

“I think we need to prepare for a more gradual recovery while we hope for that quicker rebound.”

We’re certainly not out of the woods yet, but clearly many experts anticipate we’ll see a recovery starting this year. It may be a bumpy ride for the next few months, but most agree that a turnaround will begin sooner rather than later.

During the planned shutdown, as the economic slowdown pressed pause on the nation, many potential buyers and sellers put their real estate plans on hold. That time coincided with the traditionally busy spring real estate season. As we look ahead at this economic recovery and we begin to emerge back into our communities over the coming weeks and months, perhaps it’s time to think about putting your real estate plans back into play.

Bottom Line

The experts note a turnaround is on the horizon, starting as early as later this year. If you paused your 2020 real estate plans, let’s connect today to determine how you can re-engage in the process as the country reopens and the economy begins a much-anticipated rebound.

All eyes are on the American economy. As it goes, so does the world economy. With states beginning to reopen, the question becomes: which sectors of the economy will drive its recovery? There seems to be a growing consensus that the housing market is positioned to be that driving force, the tailwind that is necessary.

Some may question that assertion as they look back on the last recession in 2008 when housing was the anchor to the economy – holding it back from sailing forward. But even then, the overall economy did not begin to recover until the real estate market started to regain its strength. This time, the housing market was in great shape when the virus hit.

As Mark Fleming, Chief Economist of First American, recently explained:

“Many still bear scars from the Great Recession and may expect the housing market to follow a similar trajectory in response to the coronavirus outbreak. But, there are distinct differences that indicate the housing market may follow a much different path. While housing led the recession in 2008-2009, this time it may be poised to bring us out of it.”

Fleming is not the only economist who believes this. Last week, Dr. Frank Nothaft, Chief Economist for CoreLogic, (@DrFrankNothaft) tweeted:

“For the first 6 decades after WWII, the housing sector led the rest of the economy out of each recession. Expect it to do so this time as well.”

And, Robert Dietz, Chief Economist for the National Association of Home Builders, in an economic update last week explained:

“As the economy begins a recovery later in 2020, we expect housing to play a leading role. Housing enters this recession underbuilt, not overbuilt…Based on demographics and current vacancy rates, the U.S. may have a housing deficit of up to one million units.”

Bottom Line

Every time a home is sold it has a tremendous financial impact on local economies. As the real estate market continues its recovery, it will act as a strong tailwind to the overall national economy.