Record Low Employment - Do You Think We Will See A Rebound In Q3?

Rental Property Investor · Dallas, TX · Member since 2015 · 502 posts · 374 votes

The record number of jobs lost over the past two months should begin coming back in Q3 and be largely regained by the end of 2021, according to an analysis by CBRE.

Over the past several weeks, 33.5 million workers filed initial claims for unemployment, indicating that the 23 million jobs gained over the past 10 years were suddenly erased. Jobs lost in April alone totaled 20.5 million—the largest one-month drop in the post-World War II period. The good news is that most job losses were reported as “temporary” and should begin returning in Q3 as an expected economic recovery takes hold.

Do you think we will begin to see a rebound in the unemployment rate?

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Erik W.

Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes

It depends on more factors than anyone on this board understands or has access to. How people feel in general will be the major driving factor. If they are scared, they will stay home and not spend money, which means we will continue to crater. If they feel optimistic, they will venture forth and spend money, which will greatly speed up recovery.

I see us on a continuum between 1 (absolute disaster) and 100 (absolute recovery). My crystal balls says we're around 70 now: damaged, beat up a bit, but still fundamentally sound. We could end up anywhere between 50 and 80 in the next 3-5 months, depending on people's attitudes, whether or not we get a "Round 2" of the virus in the Fall, and what the Govt & public response is to that.

In short: don't make any plans that depend on "things continuing to go the way they are today" because that's about the only thing I'm reasonably guessing won't be reality in 3 months. I wouldn't take out any 90 day balloon notes, in other words.

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Kody Thompson
Rental Property Investor · Lehi, UT · Member since 2020 · 159 posts · 158 votes
6y
Unfortunately the second wave is going to hit right before the election as some people care more about if their politician wins then if the american people are doing well. I dont see the corona virus situation going away and economies being destroyed as long as trump is in office.
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Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
6y
People looking at a Picasso and seeing entirely different images. Recoveries will be limited to certain areas more than others. Some areas will get boarded up Im afraid. Hoard cash if you are able.
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Joseph CacciapagliaBusiness Member
Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
6y
I think the effects will be very different, depending on your location. Here in San Antonio, TX we seem to be heading back to normal pretty quickly. Only time will tell if that's a mistake, but as of right now we don't have many cases per capita, so we're getting back to it. I have lots of friends in other major metros that are having a much different experience.
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Erik W.
Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes
6y
It depends on more factors than anyone on this board understands or has access to. How people feel in general will be the major driving factor. If they are scared, they will stay home and not spend money, which means we will continue to crater. If they feel optimistic, they will venture forth and spend money, which will greatly speed up recovery.

I see us on a continuum between 1 (absolute disaster) and 100 (absolute recovery). My crystal balls says we're around 70 now: damaged, beat up a bit, but still fundamentally sound. We could end up anywhere between 50 and 80 in the next 3-5 months, depending on people's attitudes, whether or not we get a "Round 2" of the virus in the Fall, and what the Govt & public response is to that.

In short: don't make any plans that depend on "things continuing to go the way they are today" because that's about the only thing I'm reasonably guessing won't be reality in 3 months. I wouldn't take out any 90 day balloon notes, in other words.
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Rick MartinPro Member
Rental Property Investor · Redondo Beach, CA · Member since 2017 · 411 posts · 477 votes
6y
Once the stimulus money stops, people will run out of options, but jobs for certain sectors will be limited, as many small businesses will fold. I think that is when people will feel the hurt, so I see Q3 as a bit premature. What do I know, but think Q1 and Q2 of 2021 is more likely. Having said this, certain markets with diverse economies will hold up. Can resilient sectors of the economy (tech, Bio-Med) bring up the rest of the economy?
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Paul Shannon
Rental Property Investor · Fishers, IN · Member since 2016 · 337 posts · 470 votes
6y
I think Q3 will be better than Q2, but not by much. I agree that it could take until the end of 2021 or beyond for demand to come back and our economy to roar again. I also think that's depended on businesses at least staying open and gradually loosening restrictions. Not the alternative of shutting them back down again in the fall and keeping schools closed. That would be disastrous for GDP and job losses and further dollar devaluation through money printing.
Deflation, Inflation, hyperinflation.....don't know. But I do know that there is a consequence to the life raft we've provided our businesses in the name of being compassionate towards our most vulnerable's health. Building cash.
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Bill F.
Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
6y
This article I just finished reading : How to think about uni-disciplinary advice, is oddly topical to the CBRE prediction.
That report was written by a super smart group of marco economists who are know a who hell of a lot about RE. Unless CBRE has hired a bunch of epidemiologist and a few policy advisors in the last few months though, the report is next to useless since their models rely on assumptions feed into them by epidemiological models. I don't think they go over virus transmission modeling as part of the course work. So how do the economists vet the models they use to feed theirs?
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Gordon Starr
Rental Property Investor · Dayton, OH · Member since 2015 · 312 posts · 273 votes
6y
The only thing we have to fear is fear itself. That’s was what Roosevelt told people during the recovery from the Great Depression. People are so panicked by this pandemic. The media and politicians feed the fear to justify their actions and take down their enemies. People are so afraid of death. They don’t even notice everything else that’s changing. Like the schools handing it all over to “go ogle” classroom.. originally called backrub they are the worlds leading purveyor of porn. I don’t want them in charge of video schooling my kids.
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Donovan Plummer
Lake Elsinore, CA · Member since 2014 · 26 posts · 16 votes
6y
What people need to understand is that this is fundamentally a public health crisis. And until that is fixed by way of a coordinated strategy at the national level, consumers won't regain their confidence. And without consumption, the economy could fall into a Great Depression. This idea of every state doing their own thing is a fool's errand. It is not like borders between states are controlled with big and beautiful walls and tremendous checkpoints.
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Donovan Plummer
Lake Elsinore, CA · Member since 2014 · 26 posts · 16 votes
6y
@Joseph Cacciapaglia How will your town prevent the infected from other areas and states that are worse off from coming there and spreading the virus? Do you plan on having checkpoints to check people coming in? I am just trying to figure out how this every town/state for itself strategy is supposed to work in a country where there is freedom of movement.
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Kirk R.
Peoria, IL · Member since 2013 · 967 posts · 383 votes
6y
July August September. rebound of course. if the fed government gets rid of +$600/week be lots more people trying to get jobs. July 31st last for +$600.
Wish unemployment reporting would be changed.
More meaningful is the #of people working in the US.
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Donovan Plummer
Lake Elsinore, CA · Member since 2014 · 26 posts · 16 votes
6y
@Gordon Starr FDR was leader of strong character. Until we have a national leader who can be honest, calm, factual, empathetic, and who leads from the front, it is going to be an uphill struggle to fight this contagion . I just hope our country can make it through this dumpster fire of poor leadership through to November. When you look at how countries like Germany, New Zealand, and South Korea have been able to combat this contagion, it is evidently clear that we are failing because of devastingly poor leadership at the federal level. We can have all the great experts and healthcare professionals in the world, but without a steady and honest leader who knows how to manage a crisis, the jobs of everyone involved becomes 10 times more harder. This is crisis leadership 101. Right now, we are like a giant ocean liner caught in a maelstrom and members of the crew are each trying to keep the ship afloat, but there is no captain to coordinate their efforts and steer the ship to safe harbor.
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Dean Letfus
Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
6y
As a New Zealander let me say what our incompetent govt has done is quall the virus at the cost of our economy for decades and the increased suicides and domestic violence that accompany what we have endured. History may show that a less desperate approach may be better overall.
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Joseph CacciapagliaBusiness Member
Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
6y
Originally posted by @Donovan Plummer:
@Joseph Cacciapaglia How will your town prevent the infected from other areas and states that are worse off from coming there and spreading the virus? Do you plan on having checkpoints to check people coming in? I am just trying to figure out how this every town/state for itself strategy is supposed to work in a country where there is freedom of movement.

I'm not saying that this is an every state for itself situation, I'm saying it's impacting every state and city differently, so of course it's going to effect real estate in each market differently. If you look at the results over the last couple of months, you can see that there is already a very uneven impact on a state and local level. Texas did set up checkpoints on some of it's boarders initially, but I don't think that's why we're doing so much better than most other areas. I think it has a lot more to do with differences in infrastructure and culture. I've lived in NYC, Philly, and New Orleans at different points in time, and it's no surprise to me that a virus spreads faster in those cities than it does in San Antonio. Cities with greater density and reliance on public transportation are naturally going to be places where disease spreads faster.
When I lived in NYC, I interacted with several people every day, and randomly bumped into many more. I also spent time crammed into public transit. That same environment just doesn't exist here, so of course things are spreading more slowly. The bagel stand that I stopped at every morning in NYC probably serves more people than the busiest restaurant in our downtown. The volume of human interactions is just different here, so of course the spread rate will be lower.
All that being said, I don't believe we're in anyway immune here. We're just experiencing a much flatter curve, which makes it easier for us to trace and contain. It's also easier for us to implement social distancing when we reopen, because we have more space per person to begin with. I think it's silly to assume a solution that would work in NYC would also be the right solution for San Antonio, or Nowhere Texas for that matter. There are several counties in Texas that still don't have a single case. What benefit are people getting from those people staying home? I'm curious what you think a national program would or should look like. I think adjusting the strategy and government reaction based on what's actually going on locally makes a lot of sense.
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Brian Briscoe
Real Estate Coach · Salt Lake City, UT · Member since 2017 · 273 posts · 414 votes
6y
I'll try to avoid politics here as many are resorting to turn this into a political bash-fest.

My opinion, we'll either find a vaccine or we will simply learn to live with the virus - just like our parents and grandparents lived with measles, and polio, and smallpox.... We will adapt. Businesses that adapt quickly will thrive, businesses that don't will be replaced.

For people like me that are in no danger of losing their income, it's easy to say that we should keep the economy closed and take drastic measures to ensure the safety and health of everyone. For people that are out of work with no means to buy food and pay rent (except through government handouts) -- well, their number will grow and they'll grow more and more restless and then angry, they'll force the politicians to reopen the economy... it is, after all, a democracy.

In my current day-job, I deal daily with COVID in the DoD. I'm literally the guy that puts numbers on documents for the senior leaders. What I've learned is that the COVID is not a big risk for the young and healthy (granted, we don't know long-term risks). Sure, they become infected just like anyone else, but the vast majority recover quickly. USMC has had many COVID cases, but not a single death. What does that tell me? We can (with relative safety) put the majority of the workforce back in their jobs. We just have to be more careful with the higher-risk population and those that live in areas of high population densities.

Bottom line -- the collective pain of under- or unemployment will push state and national governments to reopen. Jobs will bounce back up. Even if COVID resurges later this year, we've learned a thing or two already and can probably survive with less extreme measures.

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Joshua Rice
Member since 2020 · 20 posts · 5 votes
6y
Not in Q3, we will probably see an upward trend in late Q4 l. Best educated guess I can provide. I work in metal fabrication and we do business with multiple industries from medical equipment suppliers to heavy equipment manufactures. We do have some clients speculating on the possible social economic changes to come, post covid. So I am excluding them from my analysis. With that in mind if we exclude the medical contracts there is not enough work coming in to sustain a 40 hour work week for our shops. If you wanted to know if the economy was recovering from the housing market crash in 2008 you would go-to the lumber yard.
Watch the metal and lumber Mills. If they are working over 40 hours a week and can't talk to you it is a positive. I am biased but it was an observation.
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Josue Vargas
Real Estate Agent · San Antonio, TX · Member since 2017 · 814 posts · 466 votes
6y
No. Not a substantial rebound to call it victory.

Just look at our predecessor countries, what they have done and what they have been doing. Follow the trend? Remember, they are a few months ahead of us in this pandemic, and a good indication so far. Yet they felt good for a bit, now falling back again.
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Justin Thorpe
Member since 2020 · 437 posts · 675 votes
6y
@Jorge Abreu
Who the hell knows?
But what can you know? Here is the checklist:
1) Are all your rental units going to stay occupied thru 2021
2) Do you have cash reserves to survive if X% end up going vacant
3) Do you have cash reserves if your rent collections fall by Y%
4) Can you stand intact if other sources of income fall by X%
In short scenario planning is needed and cash is king. If you have cash it won’t matter if the rebound is next week or in Q3. If you don’t how can you raise cash.
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Stephen KeigheryBusiness Member
Rental Property Investor · New Orleans, LA · Member since 2018 · 717 posts · 555 votes
6y
It will rebound for sure as the restrictions are lifted and people are legally able to work. It's off a low base so a rebound doesn't mean much unless it is very big. The question is how big will it be and how many jobs are actually lost permenatly? It will take someone smarter than me to answer that.
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Joe Cassandra
Rental Property Investor · Woodstock, GA · Member since 2017 · 517 posts · 772 votes
6y
Originally posted by @Donovan Plummer:
What people need to understand is that this is fundamentally a public health crisis. And until that is fixed by way of a coordinated strategy at the national level, consumers won't regain their confidence. And without consumption, the economy could fall into a Great Depression. This idea of every state doing their own thing is a fool's errand. It is not like borders between states are controlled with big and beautiful walls and tremendous checkpoints.

I know you're trying to turn this into a political fight...but really, no one on the left or right :
1) Could know exactly what to do to prepare for something like this
2) Has been competent in any which way as they try and push political points during an election year...
***
As for this being strictly a public health crisis...that's all gone out the window.
According to USA Today, over 100k small businesses have likely shut their businesses for good.
People aren't going to stop spending in the long-term because they're afraid of catching the virus...
They don't have any money as their savings dried up.
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Donovan Plummer
Lake Elsinore, CA · Member since 2014 · 26 posts · 16 votes
6y
@Brian Briscoe I concur with almost everything you saod except for one thing. And that is the premise that the USMC is a microcosm of the general population. Nothing could be further from the truth. The fact of the matter is that members of the USMC are mostly able bodied healthy women and men. On the other hand, over 160 million Americans have chronic preexisting conditions that makes it more difficult for their immune systems to handle the disease like a young and healthy marine. We have way too many people with obesity, heart disease, hypertension, diabetes, and other chronic diseases. And a lot of this is a function of a healthcare system that has not been working since the 1980s and terrible lifestyle choices. This is why I think getting through this contagion is going to be a big challenge for us. If the virus is a raging fire, the underlying health issues in the general population is like fuel.
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Donovan Plummer
Lake Elsinore, CA · Member since 2014 · 26 posts · 16 votes
6y
@Joe Cassandra Once people start calling out politicians by name, then this conversation is going to get political, plain and simple. So you need to call out the posters who made this political in the first blame, not people like me who are merely rebutting a cheap political shot at a bright female politician who does my share their world view.
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