There’s an overwhelming amount of data and headlines circulating. This is my attempt to make sense of it all for you, the real estate professional, from an overall economic standpoint.
There was a lot of discussion surrounding unemployment and the economy this week. I believe the economy will rebound nicely — once the coronavirus has been defeated. How long will that take? The truth is: No one really knows at this point.
Economists are all over the place on what the ramifications will look like, but we all pretty much agree that the first quarter’s economic activity will come in at about zero. Beyond that, there is much debate about the level of contraction and growth.
The one thing we agree on, assuming the virus is behind us, is that the fourth quarter is looking very positive.
- Unemployment will soar this week. I’d expect to see an additional 2.5 million new claims. At the peak during the Great Recession, there were about 655,000.
- This week’s data will show the full force of food, retail and other service sector layoffs, which are significant.
- The Treasury Secretary last week said that he would not be surprised to see the unemployment rate to rise to up to 20 percent (from 3.5 percent). I find this to be nearly impossible. That would be another 30 million job losses. My prediction is that it will rise to 6-6.5 percent in the early part of the third quarter before starting to drop again.
The economy was not that vulnerable when the coronavirus hit, which can allow for a fairly rapid rebound once this situation is behind us, but it will take monetary and fiscal stimulation to get us back on solid footing.
Look for more on that in the coming weeks. Getting a good bill on President Trump’s desk will be imperative.
Matthew Gardner is the chief economist for Windermere Real Estate, the second largest regional real estate company in the nation.