There’s a lot of anxiety right now regarding the coronavirus pandemic. Amidst all this anxiety, anyone with a megaphone – from mainstream media to lone bloggers – knows that bad news sells.
Unfortunately, we’ll continue to see a rash of frightening headlines over the next few months. But let’s make sure we aren’t paralyzed by sensationalized headlines before we get the full story.
Finding reliable resources with information on the economic impact of the virus is more difficult. For this reason, we hope to shed some light on the situation. Frightening headlines are already starting to appear. Here are two such examples surfacing this week.
1. Goldman Sachs Forecasts the Largest Drop in GDP in Almost 100 Years
It sounds like Armageddon. Although the headline is true, it doesn’t reflect the full essence of the Goldman Sachs forecast. The projection is actually that we’ll have a tough first half of the year, but the economy will bounce back robustly in the second half; GDP will be up 12% in the third quarter and up another 10% in the fourth.
This forecast aligns with research from John Burns Consulting involving pandemics, the economy, and home values. They concluded:
“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices), and some very cutting-edge search engine analysis by our Information Management team showed the current slowdown is playing out similarly thus far.”
The economy will suffer for the next few months, but then it will recover. That’s certainly not Armageddon.
2. Fed President Predicts 30% Unemployment!
That statement was made by James Bullard, President of the Federal Reserve Bank of St. Louis. What Bullard actually said was it “could” reach 30%. But let’s look at what else he said in the same Bloomberg News interview:
“This is a planned, organized partial shutdown of the U.S. economy in the second quarter,” Bullard said. “The overall goal is to keep everyone, households and businesses, “whole” with government support.
According to Bloomberg, Bullard also went on to say:
“I would see the third quarter as a transitional quarter” with the fourth quarter and first quarter next year as “quite robust” as Americans make up for lost spending. “Those quarters might be boom quarters,” he said.
Again, Bullard agrees we will have a tough first half and rebound quickly.
There’s a lot of misinformation flying from all directions right now. If you want solid advice on what’s happening in the current housing market, we have current statistics and projections. Let’s talk today.
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