May 17, 2021

As more and more people are vaccinated and as more states allow businesses to open, it’s a good time to think about the longer-term fall-out from the pandemic, both nationally and for individual markets.

But first, let’s remember that the pandemic is still here and could upset the optimistic outlook. If large numbers of people refuse vaccination or deadlier variants of the virus circulate or public health measures are not followed, a resurgence of the pandemic could ┬áproduce an economy that just sputters along.

Right now that doesn’t seem likely. The estimates for Gross Domestic Product show that the economy is just about back to pre-pandemic levels and should be in positive territory the rest of the year.

The latest job figures show that 4 percent of the pre-pandemic jobs have still not returned, and that these losses aren’t confined to restaurant workers. But the good news is the rapid improvement in the business services sector, the largest and broadest part of the economy that provides lawyers, accountants, temps, janitors, and all the other services that businesses need. It’s our best indication that business in general is picking up.

At the same time, two other important sectors are not improving: healthcare and local government.

This means that we can start to classify markets according to how much their growth is tied to business services, healthcare and government – and how well those local sectors are doing. In San Antonio and Birmingham, for example, jobs in business services are growing fast, whereas in Los Angeles and Orlando they’re still deep in the red. This gives us a good idea where real estate markets will be strong or weak.

Compared to pre-pandemic levels, the overall loss of jobs in April was 4.4 percent, including losses of 2 percent in business services, 2 percent in retail, 3 percent in healthcare, 3.8 percent in manufacturing, 4.8 percent in government, and 11 percent at restaurants.

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