The current pandemic has caused confusion and uncertainty as people are overwhelmed with information about the COVID-19 virus. While epidemiologists and virologists are trying to come up with answers about the virus, economists are trying to predict its aftermath and effect on our economy. And as the country continues to work through the health crisis, conversations are starting to turn to economic recovery. While we look for signs that we’ve reached a plateau in virus cases, the scenario of what will happen as businesses open up again plays out in our minds. There is speculation about what our economic recovery will look like and how quickly businesses will rebound after the shutdown. It is important to understand how our economists will attempt to predict our road to recovery, by analyzing three scientific modules.
In this research scientists will compare the current economic slowdown with previous downturns and look into how the economy rebounded from slowdowns in the past. But while previous recessions may tell a tale of recovery, it is important to note that each economic slowdown is unique due to the conditions that set it off. The 2008 downturn was based on a financial crisis in contrast to our current situation which was initiated by a pandemic health crisis and its consequential preventative measures. Our current situation therefore requires that the analysis of health science be included in the forecast model.
Since the reopening of the economy is dependent on the pandemic recovery, economists have to consider when the COVID-19 outbreak will be fully under control and take into account when employees will be able to return to work. This analysis must be considered in conjunction with the study of how people will respond to the reopening.
After businesses are fully operational, economists will analyze consumer behavior to determine how long it will take American consumers to return to normal consumption. For example, when will Americans resume activities such as going to the movies, attending a sporting events, or flying.
While it is hard to predict the exact road to recovery, history cautiously suggests that the path will be a relatively quick one. Sam Khater, who is the Chief Economist at The Federal Home Loan Mortgage Corporation, known as Freddie Mac, predicts a turnaround during the second half of the year. He optimistically opines that “Although the uncertainty of the crisis means forecasts of economic activity are more unclear than usual, we expect that most of the economic damage from the virus will be contained to the first half of the year. Going forward, we should see a recovery starting in the second half of 2020.”
As time goes on, we’ll in all likelihood gain clarity about what the true economic recovery process will look like, and we’ll have more information based on the three scientific modules outlined earlier.
While quarantined at home, it is a good time for buyers to reach out to their realtor to get educated about engaging in the home buying process. Likewise sellers should contact their realtor for guidance in getting their house ready for sale, so that when the economy comes back to life they are ready to proceed.
As the businesses open up and the economy rebounds, the American spirit of grit, growth, and prosperity will come alive again. Be ready!
Rita Tepfer is a Real Estate Salesperson with Olam Realty Group and Assists Buyers and Sellers with Their Real Estate Needs.
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