June 21, 2021
Measured by retail spending, the recession was over several months ago. Just the idea that vaccinations will end the pandemic was enough to end the cautious behavior of consumers. It’s almost certain that Gross Domestic Product for the second quarter will be back above pre-pandemic levels. And so many people wanted to buy a home at a time of short supply that home prices rose sharply.
The exuberance is so great that governments would find it impossible to re-impose covid restrictions even if new cases surge again. So at least we find ourselves in a more predictable economic situation, even if that situation is a bit hard to define.
The difficulty stems from the more fluid job situation and from the unknown future for renters. The pandemic has accelerated and altered the way jobs are created and used, many businesses finding, for example, that remote work is more efficient so they don’t need as many workers. And even if remote work is impossible, all sorts of businesses are re-examining how many workers they can do without.
How this shakes out will have implications for local economic growth. Markets with labor-intensive businesses or those most readily automated will see lower job growth in the near future, while others that provide a congenial life-style will attract remote workers and businesses that have higher-paid but fewer employees.
These trends will leave a lot of people in the lurch, not even counting the millions who do not recover the job they lost during the pandemic. The majority of these people are renters; how and where they will live is not only a real estate issue but a political one.
Compared to pre-pandemic levels, jobs were down 3.7 percent in May, including 1.5 percent in retail, 0.4 percent in finance and 8 percent at restaurants. The good news is that jobs in business services were down just 1.7 percent, a continuing trend of recovery; the bad news is that jobs in manufacturing, healthcare and government remain stuck at the same level now for months, down 4 percent, 3 percent and 5 percent, respectively. It’s in these three sectors that we’re likely to see permanent job losses.