Monday, May 4, 2020
The SoCal Economic Recovery Starts Now: An Update, #TimeToBuy,#FirstTimeHomeBuyers,#MoveUpHomeBuyers,#5StarREALTOR,#HyperLocal, #ChrisBJohnsonREALTOR,#TopProducer,#FlipandFix,#RealEstateInvestor,#RentalProperties, #BoomerageBuyers,#MultiGenerationalBuyers,#AJIBoom,#FindYourDreamHome,#PreApproval #virtualopenhouse #yournexthome #virtualrealtor #virtualtours #preapproved #fixandflip #shortsale #realestateinvestors #refi #buildingwealth #homebuying #homeownership #homebuyers #bidonhomes #xomeagentnetwork #363benttwig #14242valleyvista #3676_5thave
The SoCal Economic Recovery Starts Now: An Update: #HousingDrivesOurEconomy,Annualized GDP growth in the first quarter came in at -4.8 percent. The report doesn’t really provide in........................BY CHRIS B JOHNSON REALTOR®
Annualized GDP growth in the first quarter came in at -4.8 percent. The report doesn’t really provide information on the extent of the actual GDP decline that has occurred over the last 6 weeks or since mid-March.
GDP was tracking at about a 2 percent rate of growth in January and February (and likely the first 2 weeks in March). Consequently, over a two week period in which there was an abrupt and severe closure of the economy, the impact on GDP was crushing. And this has continued through April and likely will through much of May.
The rate of real GDP growth is likely in the vicinity of negative 35 to 40 percent.
The immediate loss of sales and then jobs and income is the first blow to the economy. Stay-at-home orders substantially limit spending even by consumers who are not losing income. The first quarter GDP numbers show that the principal pullbacks on spending were restaurants and bars, airlines, and healthcare.
Stimulus checks and unemployment insurance are offsetting some of the impact but it’s tiny in comparison to the losses being suffered. Only half of small businesses that applied for PPP funding received it in the first round.
A second blow to the economy affecting households is diminished wealth. Losses in the U.S. stock market are 25 percent, even with its recent recovery. The negative wealth effects—the change in consumer spending in response to a loss of wealth—are and will continue to be substantial. The baby boom cohort, now in its late 50s to early 70s and owning 60 percent of all stock value, has become particularly reticent about spending.
Stay-at-home mandates are wrecking the economy, not only in the present but for the future. The longer the present carnage persists, the longer the recovery period and the higher the chance for subsequent business failures and persistent unemployment.
In a recent Goldman Sachs survey, 23 percent of small businesses are not confident they will survive. This number will grow if these firms are not allowed to resume business.