I hope everyone is getting through these tough times during the Corona Virus pandemic. I know that in some parts of the country they are starting to open up and move forward. In other parts of the country they are still in the grips of consistent cases of the virus and very difficult times. Our thoughts are with all of these people. We are all in this together and all have our part to do. Let’s continue adhering to the guidelines and help everyone we can.
I recently read some good information about the economy, where it is and where it may be going. Michelle Hayes with Bok Financial Mortgage group provided the information below.
|COVID-19-related layoffs continued to mount, while consumer sentiment understandably slid, and the pace of consumer borrowing growth increased.|
Initial Jobless Claims
The nation’s COVID-19 economic shutdown continued to wreak havoc on employment with a continuing spike in layoffs. While the pace of layoffs decreased, the gains are still unprecedented.
First-time claims for unemployment benefits filed by recently unemployed Americans during the week ending April 4 declined to 6,606,000, a decrease of 261,000 claims from the preceding week’s total of 6,867,000, the Employment and Training Administration reported last week.
The four-week moving average – regarded as a more reliable measure of jobless claims – hit 4,265,500 claims, which was 1,598,750 claims higher than the previous week’s average of 2,666,750.
To put recent jobless claims totals in perspective, numbers such as these are entirely new territory for the world’s economists.
“In its first month alone, the coronavirus crisis is poised to exceed any comparison to the Great Recession,” Daniel Zhao, senior economist for recruiting company Glassdoor, told the Reuters news service. “The new normal for unemployment insurance claims will be the canary in the coal mine for how long the effects of the crisis will linger for the millions of newly unemployed Americans.”
Not surprisingly, the pandemic’s economic toll has impacted consumer attitudes. The Index of Consumer Sentiment fell to 71 in April, which was 20.3 percent down from March’s score of 89.1, the University of Michigan Surveys of Consumers reported last week. This was the largest decline ever recorded by the Surveys. Compared to the same period a year ago, April’s score was 27 percent down from April 2019’s score of 97.2.
The Index of Current Economic Conditions, which describes how consumers feel about the current economy and their place in it, dropped to 72.4 in April, which was 30.2 percent down from March’s 103.7. The Index of Consumer Expectations, which tallies how consumers expect the economy to fare in the near future, dropped to 70 in April, which was 12.2 percent down from March’s reading of 79.7.
As noted in last week’s special report, anticipating a quick and sustained economic expansion is likely to be a failed expectation, resulting in a renewed and deeper slump in confidence. Indeed, the peak decline in the Expectations Index recorded in December 1980 reflected a relapse following the end of the short January to July 1980 recession, signaling the start of a longer and deeper recession that lasted from July 1981 to November 1982.
“Consumers need to be prepared for a longer and deeper recession rather than the now-discredited message that pent-up demand will spark a quick, robust, and sustained economic recovery,” Surveys of Consumers chief economist Richard Curtin noted in notes accompanying the data. “Continued declines in the seven-day average Sentiment Index can be expected in the weeks ahead (see the featured chart). Sharp additional declines may occur when consumers adjust their views to a slower expected pace of economic recovery.”
Consumer borrowing grew to $4.225 trillion in February, which was 6.4 percent higher than January’s $4.203 trillion, according to last week’s report from the Federal Reserve. The pace of growth was quicker than the 3.5 percent gain in December.
Revolving debt, such as credit cards, grew to $1.096 trillion in February, which was 4.6 percent higher than January’s balance of $1.091 trillion. Non-revolving debt, such as car and college loans, rose to $3.129 trillion in February, which was 7 percent higher than January’s total of $3.111 trillion.
Of course, February’s data doesn’t include the impact of COVID-19. We shall see how the mix of panic buying and layoffs cumulatively impacted consumer credit scores for March (either for the better or worse) in the next report.
This is in contrast to what I have heard from some other Realtors lately, one specific firm in Aspen, sent out this information:
“Remember post 9/11 in Aspen? There was a surge in Aspen real estate activity as families sought the safety and refuge of small-town living. When the COVID-19 restrictions begin to relax there will be a similar surge with Buyers fleeing big cities for the rural luxury of Aspen and other Rocky Mountain enclaves.(Vail) This projected influx is based on the following observations:
- Prior to COVID-19 there was an ongoing exodus from the tax-burdened states in the Northeast and Midwest; this migration will deepen as people likely will choose the safer rural luxury lifestyle of Aspen(Vail) over the densely populated cities and towns that have experienced the worst of the pandemic.
- With a few exceptions, people are realizing they CAN work effectively from home using Zoom and FaceTime and it won’t matter as much where they live…so why not live in the wide open and uncongested spaces of the (Vail Valley).”
I don’t agree with this view and I think comparing what we are going through with the Covid-19 pandemic to 9/11 is a mistake. I hope I am proven wrong. My biggest take away from the economic information above is where it says:
“Consumers need to be prepared for a longer and deeper recession rather than the now-discredited message that pent-up demand will spark a quick, robust, and sustained economic recovery,”
We can debate the effects, where the economy is going and how it will affect the real estate market. I think we will see a drop in prices and it will be a great opportunity for Buyers and Sellers alike. As prices drop, you will see people enter the market that may not have been able to do so before. But, we will see a drop in Buyers that are qualified as many people will be affected economically from the pandemic. It won’t be the quantity that we are used to but it will be quality Sellers and Buyers coming together. I think the most important thing during this time is to have an experienced professional that can help you with all of your real estate needs. You need someone that is up to date on what is happening in the market, the real estate profession and is connected in the local market and can find you the perfect Buyer or Seller. I am that person. Now is not the time to use someone that just started in the real estate profession, your neighbor’s son or daughter or someone that just moved to the area in the last few years. I bring 25 years of experience in the Vail Valley and can help you find the home of your dreams and everything that goes with investing in, moving to and owning a property in the Vail Valley.
If you or anyone you know needs help with real estate services or anything non real estate related in the Vail Valley, please call me, Jon Lindner at firstname.lastname@example.org/ www.BuyColoradoRealty.com.