January 15, 2021
The latest job figures and health bulletins give us a bit more insight into the dynamics of the pandemic. The slow improvement of the job situation has come to a halt as covid infections and deaths are reaching new highs. The fact that many people have given up on public health measures to control the virus – even as vaccines are actually here – means that the pandemic will probably last beyond 2021 and the economy won’t recover for a couple of years.
This won’t affect the prospects for the rental market very much, just push recovery a year further into the future. I still think we’ll have large numbers of evictions this year and lots of empty rental units because landlords will have a tough time finding replacement tenants; but in the long run more and more people will be renting.
The bigger effect would be on the homeowner market, which had a very good 2020 because of ultra-low mortgage rates. The longer the pandemic lasts, the greater will be the damage to the financial resources of potential home buyers and existing homeowners.
Overall, the number of jobs in December was down 6 percent, including losses of 4.2 percent in manufacturing, 2.7 percent in retail, 0.7 percent in finance, 3.7 percent in business services, 2.6 percent in healthcare, a whopping 19 percent at restaurants, and a very worrying 5.5 percent in government.
Instead of improving, the situation in government is steadily getting worse. Local governments have no financial cushion to keep people on their payroll; this could be a harbinger for other sectors of the economy if the pandemic persists.