As we continue to work through the health crisis that plagues this country, more and more conversations are turning to economic recovery. While we look for signs that we’ve reached a plateau in cases of COVID-19, the concern and fear of what will happen as businesses open up again is on all of our minds. This causes confusion about what an economic recovery will look like. With this in mind, it’s important to understand how economists are using three types of sciences to formulate their forecasts and to work toward clearer answers.
- Business Science – How has the economy rebounded from similar slowdowns in the past?
- Health Science – When will COVID-19 be under control? Will there be another flareup of the virus this fall?
- People Science – After businesses are fully operational, how long will it take American consumers to return to normal consumption patterns? (Ex: going to the movies, attending a sporting event, or flying).
Sam Khater, Chief Economist at Freddie Mac, says:
“Although the uncertainty of the crisis means forecasts of economic activity are more unclear than usual, we expect that most of the economic damage from the virus will be contained to the first half of the year. Going forward, we should see a recovery starting in the second half of 2020.”
This past week, the Bureau of Economic Analysis released the advanced estimate for Gross Domestic Product (GDP) for the first quarter of 2020. That estimate came in at -4.8%. It was a clear indicator showing how the U.S. economy slowed as businesses shut down and consumers retreated to their homes in fear of the health crisis and of contracting COVID-19.Experts agree that the second quarter of 2020 will be an even greater slowdown, a sign more businesses are feeling the effects of this health crisis. The same experts, however, project businesses will rebound, and a recovery will start to happen in the second half of this year.
As time goes on, we’ll have more clarity around what the true economic recovery will look like, and we’ll have more information on the sciences that will affect it. As the nation’s economy comes back to life and businesses embrace new waves of innovation to serve their customers, the American spirit of grit, growth, and prosperity will be alive and well.
Moving Forward Together
We’re in uncharted territory with Covid-19. The medical facts about the virus change daily. Meanwhile, the media generates a constant stream of fear inducing headlines. This combination can be overwhelming. To stay grounded during these uncertain times, it serves us well to recall a line delivered by F.D.R during his inauguration speech in 1933 – “the only thing we have to fear is fear itself.” This phrase, at the height of the great depression, gave people hope and a new way to look at a world wide depression that had been going on for three years. Ultimately, this phrase served as one of the pillars that led to the rebuilding of the economy.
Our mission is to provide you with accurate timely information about the real estate market. We follow the best minds in the real estate and share that information with you as it becomes available. Armed with actionable information, you can set aside fear and actively plan for your future. To that end, we’re here for you. Let’s get together for an online meeting to review the market and how it relates to your situation. To be clear this isn’t a sales call — this is one of the ways that our team gives back in these challenging times. To schedule a chat, click the Let’s Talk link and schedule a time that works for you: Let’s Talk.
Like you, we’re counting the days till life returns to normal and we can once again go to Powell’s Books, our favorite restaurants, the beach, the mountains, and all the activities that make Portland an incredible place to live. In the meantime, we’re here for you … stay safe out there … James Bradley