Is the Economic Recovery Already Underway?

Is the Economic Recovery Already Underway?

Is the Economic Recovery Already Underway? | MyKCM

The Wall Street Journal just released their latest monthly Survey of Economists. In an article on the findings, they reported:

“The U.S. economy will be in recovery by the third quarter of this year, economists said in a survey that also concluded the labor market will fare better than previously expected following the effects of the coronavirus pandemic.”

Clearly, the latest jobs report from the U.S. Bureau of Labor Statistics confirmed the labor market is outperforming expectations, as it revealed that 2.5 million jobs were added. Directly before the release, experts forecasted that we would lose over 8 million jobs.

A second revelation indicating the economy is already about to turn around was also somewhat unexpected. More than 9 out of 10 economists surveyed believe the recovery has already begun this quarter or will begin in the third quarter. Here are the results of the survey question asking when the recovery will begin:Is the Economic Recovery Already Underway? | MyKCMThe survey also asked what type of recovery the economists expect.

More than 8 out of 10 believe it will be a form of a ‘V’ recovery:

  • A true ‘V’ with a sharp drop and a sharp rebound
  • A ‘Nike Swoosh’ with a sharp drop and a more gradual recovery, coined after the company’s logo

Some experts, possibly concerned about a second wave of COVID-19, call for a ‘W’ recovery – a double dip recession.

Others call for a ‘U’ with a prolonged bottom.

A very small percentage project the dreaded ‘L’ recovery, which is no recovery at all for the foreseeable future (think of the Great Recession).

Here’s the breakdown:Is the Economic Recovery Already Underway? | MyKCM

Bottom Line

Though we still have a long and difficult journey ahead, it appears the worst for both the economy and the unemployment situation may be in our rearview mirror.

Real Estate Will Lead the Economic Recovery

Real Estate Will Lead the Economic Recovery

Real Estate Will Lead the Economic Recovery | MyKCM

With more U.S. states reopening for business this summer, and as people start to return to work, we can expect the economy to begin improving. Most expert forecasts indicate this economic recovery will start to happen in the second half of this year. As we get back to work and the financial landscape of the country begins to turn around, many experts also agree that real estate has the potential to lead the way in the recovery process.

According to Ivy Zelman of Zelman & Associates:

 “Housing will fare better than expected during this severe downturn.”

In addition, CNBC notes:

“Mortgage demand from home buyers shows unexpectedly strong and quick recovery…The quick recovery has surprised most forecasters.”

Robert Dietz, Chief Economist and Senior Vice President for Economics and Housing Policy of the National Association of Home Builders (NAHB) says:

“Overall, the data lend evidence to the NAHB forecast that housing will be a leading sector in an eventual economic recovery.”

One of the big reasons why housing has the potential to be such a driving force is the significant impact it has on the local economy. This impact is particularly strong when a newly constructed home is built and sold. According to a recent study by the National Association of Realtors (NAR), the average new home sale has a total economic impact of $88,416. As outlined in the graphic below, this is a combination of income generated from real estate industries, expenditures, and new home construction.Real Estate Will Lead the Economic Recovery | MyKCMWith so many unknowns today, especially in the wake of a worldwide pandemic, one known factor is the bright spark the housing market can play in local and national recovery. Buying and selling a home goes well beyond personal growth and satisfaction – it supports our economy as a whole.

Bottom Line

According to experts, the economy will begin to recover in the second half of this year. With real estate as a driver, that recovery may start sooner than we think.