SAN FRANCISCO / WASHINGTON (Reuters) – Despite the loss of the US economy with a depression last year and an ongoing coronavirus pandemic that has halted travel, Jeff Hurst, the chief executive of the rental firm VRBO vacation, sees a boom on the horizon.
“All homes will be taken this summer,” Hurst said, as planned protection against vaccines comes at the same time as the warmer weather, triggering a population that has been saved with record savings. “There’s so much accumulated demand for that.”
This kind of bullish sentiment has become increasingly entrenched among executives, analysts and consumers who see the last year of comparative hibernation (from the government-ordered closure last spring to the continued risk avoidance by the public) giving step to a prudent re-emergence and green shoots in the economy.
Data from AirDNA, a short-term rental analysis company, showed that holiday bookings in late March, which traditionally coincide with spring break in college, are just 2% below their pre-pandemic level. Job offers in the workplace are, in fact, 4% above a pre-pandemic baseline. Data on retail walking traffic, air travel and diners sitting in restaurants have increased.
And economists ’forecasts have risen massively, with companies like Oxford Economics seeing a“ shrinking ”economy with 7% growth this year, more typical of a developing country.
In a symbolic milestone, Major League Baseball teams took to the field on Sunday, as planned, for the first games of the spring training season. Crowds had to abide by the rules of social distancing and were limited to around 20% of capacity, but MLB has a full schedule that is based on a truncated 2020 season that didn’t start until July and saw teams play in empty stages.
The dodged depression
As of February 25, nearly 46 million people in the United States had received at least the first dose of COVID-19 vaccine, still less than 15% of the population and insufficient to dampen the spread of a virus that has killed more than half a million people in the country, according to the U.S. Centers for Disease Control and Prevention.
The appearance of coronavirus variants carries risks and a return to normal life before immunity is extended could take a new step in the virus.
Nor is optimism global. The European short-term rental market, for example, suffers, with tens of thousands of Airbnb deals withdrawn. Up to a fifth of supply has disappeared in cities such as Lisbon and Berlin, as owners and managers adapt to a hectic deployment of vaccines and doubts about the resumption of cross-border travel.
We do not live the negative case that worried us so much the first half of the year. We have a chance to return to a much better place in the second half of this year.
– Jerome Powell, president of the Federal Reserve
In the United States, the introduction of the vaccine and the sharp decline in new cases have produced an unthinkable economic outlook a year ago when the Federal Reserve opened its emergency game book in a concrete promise of action and Congress went approve the first of the various rescue efforts.
At the time, the fear was to produce years of production similar to the Great Depression of the 1930s, while some projections predicted millions of deaths and an expanded national quarantine. Instead, the first vaccines were distributed before the end of 2020 and a record fiscal and monetary intervention led to an increase in personal income, something unheard of in a recession.
“We’re not experiencing the negative case that worried us so much in the first half of the year,” Fed Chairman Jerome Powell told lawmakers Wednesday. “We have a chance to get back to a much better place in the second half of this year.”
“Rock on”
U.S. gross domestic product, the broadest measure of economic output, may surpass its pre-pandemic level this summer, approaching the V-shaped rebound that seemed unrealistic a few weeks ago.
This would mean even more than a year of loss of growth, but nevertheless represents a recovery twice as fast as the recovery from the 2007-2009 recession.
Work has not gone on so quickly. The economy remains about ten million positions below where it was in February 2020, and this hole remains an urgent problem for policymakers, in addition to completely reopening schools and utilities.
It took six years after the last recession to reach the previous peak of employment, a glacial process that officials desperately want to shorten.
While little progress has been made in recent months, the outlook may improve. Treasury Secretary Janet Yellen said in mid-February that the country had a fighting opportunity to get full employment next year.
However, it can take longer than vaccines. Officials are debating how to completely and permanently rewrite the crisis response rules, and specifically how much and what elements of the $ 1.9 trillion proposed bailout plan the Biden administration needs to approve.
Last year, tax leaders put aside many old totems, including fear of public debt and concern about “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 fired worker; for Democrats, it meant helping airlines and temporarily relaxing banking regulations.
It worked and so well that a strange consortium of doubters emerged to question how much more is needed: Republicans arguing that aid should only be aimed at those who needed it and some Democrats worrying that so much Government spending on an economy prepared to accelerate can lead to inflation or problems in financial markets.
However, if the outlook improves, it is anticipated that government support will continue at appropriate levels to finish the job.
“Go ahead,” Bank of America analysts wrote in a Feb. 22 note that increased its full-year GDP growth forecast to 6.5%, a result based on the approval of 1, $ 7 trillion in additional government aid, “unequivocally positive” health news and stronger consumer data. With all of this in mind, “we expect the economy to accelerate even further in the spring and really come to life in the summer.”
And the view back to VRBO? In most prime vacation spots, Hurst said, “You can’t find a home.”
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