Earlier this month, the Bureau of Labor Statistics (BLS)
released their most recent Jobs Report. The report revealed that the economy
lost 140,000 jobs in December. That’s a devastating number and dramatically
impacts those households that lost a source of income. However, we need to give
it some context. Greg Ip, Chief Economics Commentator at the Wall Street
Journal (WSJ), explains:
“The economy is probably not slipping back into
recession. The drop was induced by new restrictions on activity as the pandemic
raged out of control. Leisure and hospitality, which includes restaurants,
hotels, and amusement parks, tumbled 498,000.”
In the same report, Michael Pearce, Senior U.S. Economist of
Capital Economics, agreed:
“The 140,000 drop in non-farm payrolls was entirely due
to a massive plunge in leisure and hospitality employment, as bars and
restaurants across the country have been forced to close in response to the
surge in coronavirus infections. With employment in most other sectors rising
strongly, the economy appears to be carrying more momentum into 2021 than we
had thought.”
Once the vaccine is distributed throughout the country and
the pandemic is successfully under control, the vast majority of those 480,000
jobs will come back.
Here are two additional comments from other experts, also
reported by the WSJ that day:
Nick Bunker, Head of Research in North America for
Indeed:
“These numbers are distressing, but they are reflective
of the time when coronavirus vaccines were not rolled out and federal fiscal
policy was still deadlocked. Hopefully, the recent legislation can help build a
bridge to a time when vaccines are fully rolled out and the labor market can
sustainably heal.”
Michael Feroli, Chief U.S. Economist for JPMorgan Chase:
“The good news in today’s report is that outside the
hopefully temporary hit to the food service industry, the rest of the labor
market appears to be holding in despite the latest public health challenges.”
What impact will this have on the real estate market in
2021?
Some are concerned that with millions of Americans
unemployed, we may see distressed properties (foreclosures and short sales)
dominate the housing market once again. Rick Sharga, Executive Vice President
at RealtyTrac, along with most other experts, doesn’t believe that will be the
case:
“There are reasons to be cautiously optimistic despite
massive unemployment levels and uncertainty about government policies under the
new Administration. But while anything is possible, it’s highly unlikely that
we’ll see another foreclosure tsunami or housing market crash.”
Bottom Line
For the households that lost a wage earner, these are
extremely difficult times. Hopefully, the new stimulus package will lessen some
of their pain. The health crisis, however, should vastly improve by mid-year
with expectations that the jobs market will also progress significantly.
Source: Real Estate with Keeping Current Matters