SAN FRANCISCO / WASHINGTON (Reuters) – Despite the fact that the US economy is almost lost, with a depression last year and an ongoing coronavirus pandemic that led to the interruption of travel, Jeff Hurst, the executive director of the vacation rental company VRBO, sees a boom on the horizon.
“Every home will be taken this summer,” Hurst said, as expected vaccine protection comes in handy in warmer weather, unleashing a crowded population with hidden record savings. “There’s so much accumulated demand for it.”
This kind of sentiment has taken root among executives, analysts and consumers who see comparative hibernation last year – from the government-commissioned closure last spring to continued public risk avoidance – giving place of a prudent reappearance and green shoots in the economy.
Data from AirDNA, a short-term rental analysis firm, showed that holiday bookings for the end of March, which traditionally coincide with the college’s spring breaks, are just 2% below their pre-pandemic level. Jobs actually employed are 4% above the initial pre-pandemic value. Data on retail pedestrian traffic, air travel and restaurant seating have increased.
And economists’ forecasts have grown en masse, with companies such as Oxford Economics seeing a “reduced” economy growing by 7% this year, more typical of a developing country.
In a symbolic stage, the Major League Baseball teams went out on Sunday, as scheduled, for the first games of the spring training season. The crowds were forced to abide by the rules of social distancing and limited to about 20% of capacity, but MLB has a full schedule drawn after a truncated 2020 season that didn’t start until July and saw teams playing in empty stadiums.
Depression avoided
As of February 25, approximately 46 million people in the United States have received at least their first dose of COVID-19 vaccine – still less than 15% of the population and insufficient to slow the spread of a virus that has killed more and more. of half a million people in the country, according to the US Centers for Disease Control and Prevention.
The appearance of coronavirus variants presents risks, and a return to normal life before immunity is spread could give the virus a new foothold.
Optimism is not global either. The European short-term rental market, for example, suffers with tens of thousands of Airbnb deals drawn. Up to a fifth of supply has disappeared in cities such as Lisbon and Berlin, as owners and managers are adapting to a hectic launch of the vaccine and are hesitant to resume cross-border travel.
We are not living at a disadvantage, so worried about the first half of the year. We have the prospect of returning to a much better place in the second half of this year.
– Jerome Powell, president of the Federal Reserve
In the United States, the launch of the vaccine and a sharp drop in new cases produced an unimaginable economic outlook a year ago, when the Federal Reserve opened its emergency card in a concise promise of action and Congress approved the first of several rescue efforts.
The fear was then years of withdrawn production similar to the Great Depression of the 1930s, while some projections predicted millions of deaths and an extended national quarantine. Instead, the first vaccines were distributed before the end of 2020, and record fiscal and monetary intervention led to an increase in personal income, which was unheard of in a recession.
“We are not living the negative case, so worried about the first half of the year,” Fed Chairman Jerome Powell told lawmakers on Wednesday. “We have the prospect of returning to a much better place in the second half of this year.”
“Rock on”
The US gross domestic product, the largest measure of economic production, could exceed its pre-pandemic level this summer, approaching the “V-shaped” return that seemed unrealistic a few weeks ago.
That would still mean more than a year of lost growth, but it is still twice as fast as the recovery from the 2007-2009 recession.
Jobs did not follow as quickly. The economy remains with about 10 million fewer jobs than in February 2020, and this hole remains a pressing issue for policy makers, along with the complete closure of schools and public services.
It has taken six years since the last recession to reach the previous peak of employment, officials of a glacial process desperately want to shorten.
While progress has been slow in recent months, the outlook may improve. Treasury Secretary Janet Yellen said in mid-February that the country had a good chance of reaching full employment next year.
However, it can last longer than vaccines. Officials are discussing how to completely and permanently rewrite the crisis response rules – and specifically how and what elements of the rescue plan proposed by the Biden administration approved $ 1.9 trillion.
Tax leaders threw away many old totems last year, including fear of public debt and concern for “moral hazard” – the bad incentives that can generate generous public benefits or corporate bailouts. For Republicans, this meant approving initial unemployment insurance benefits that often exceeded the salary of a laid-off worker; for Democrats, it meant supporting airlines and temporarily easing banking regulations.
It also worked so well that a strange consortium of doubts arose that questioned how much was needed: Republicans claiming that aid should be directed only to those in need and some Democrats worried that so many Government spending in an economy is poised to accelerate can cause inflation or problems in financial markets.
However, if the outlook improves, it is waiting for government support to continue at appropriate levels to complete the work.
“Ignite,” Bank of America analysts wrote in a Feb. 22 note, boosting its year-over-year GDP growth forecast to 6.5 percent, a result that was approved with $ 1.7 trillion in additional aid. “unambiguously positive” health news and stronger consumer data. Given all this, “we expect the economy to accelerate further in the spring and come to life in the summer.”
And viewing back to VRBO? In most primary vacations, Hurst said, “You won’t be able to find a home.”
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