SAN FRANCISCO / WASHINGTON (Reuters) – Despite the US economy’s downturn last year with a depression and an ongoing coronavirus pandemic that brought travel to a halt, see Jeff Hurst, CEO of holiday rental company VRBO, ‘ a boom in the horizon.
“Every home is going to be taken this summer,” Hurst said, while the expected protection against vaccines comes in line with the warmer weather, leaving a trained population with a record saving. “There’s so much built-up demand for it.”
This kind of bullish sentiment has increasingly taken root among executives, analysts and consumers who have seen comparative hibernation over the past year – from the government’s orders to shut down the business last year to the continued risk avoidance by the public – which makes way for a cautious re-emergence and green shoots in the economy.
Data from AirDNA, a firm for short-term rental analysis, showed that holiday bookings for the end of March, which traditionally coincide with spring holidays at the university, are only 2% lower than their pre-pandemic level. The jobs in the workplace are indeed 4% above a baseline before pandemic. Data on retail foot traffic, air travel and seating at restaurants have been rising.
And economists’ forecasts have risen massively, with companies such as Oxford Economics seeing a ‘slashed’ economy, which is growing by 7% this year, more typical of a developing country.
In a symbolic milestone, the Major League Baseball teams braved the field on Sunday, as scheduled, for the first games of the spring training season. Crowds had to adhere to social distance rules and be limited to about 20% of capacity, but MLB has a full schedule following a truncated 2020 season that only started in July and saw teams play in empty stadiums.
Depression eluded
On February 25, about 46 million people in the United States received at least their first dose of COVID-19 vaccine – still less than 15% of the population and not enough to curb the spread of a virus that killed more . according to the U.S. Centers for Disease Control and Prevention, than half a million people in the country.
The emergence of coronavirus variants carries risks, and a return to normal life before immunity is widespread can give the virus a new foothold.
Optimism is not global either. The European short-term rental market, for example, is suffering, with tens of thousands of Airbnb offers. Up to one-fifth of supply has disappeared in cities such as Lisbon and Berlin as owners and drivers adapt to a turbulent vaccination and doubts about resuming travel across the border.
We do not live the disadvantage we were so worried about the first half of the year. We have the prospect of coming to a much better place again in the second half of this year.
– Jerome Powell, Chairman of the Federal Reserve
In the United States, the rollout of vaccines and a sharp decline in new cases produced an economic outlook that was unthinkable a year ago when the Federal Reserve opened its emergency book in a stern promise of action and Congress the first of approved several rescue efforts.
The fear was then years of hampered production similar to the Great Depression in the 1930s, while some projections predicted millions of deaths and an extensive national quarantine. Instead, the first vaccines were distributed before the end of 2020, and a record fiscal and monetary intervention led to a rise in personal income, something unheard of in a recession.
“We are not living the downside we were so worried about the first half of the year,” Fed Chairman Jerome Powell told lawmakers Wednesday. “We have the prospect of coming to a much better place again in the second half of this year.”
‘Rock on’
The U.S. gross domestic product, the broadest measure of economic production, could reach its peak pandemic level this summer, approaching the ‘V-shaped’ rebound that seemed unrealistic a few weeks ago.
It would still mean more than a year of lost growth, but it has nevertheless recovered twice as fast as the rebound of the 2007-2009 recession.
Jobs did not follow so quickly. The economy remains about 10 million positions lower than in February 2020, and the gap remains an urgent problem for policymakers, along with the restoration of schools and public services.
It took six years after the last recession to reach the previous work peak, which is an ice process that officials desperately want to shorten.
Although little progress has been made in recent months, the outlook may improve. Finance Minister Janet Yellen said the country has a fighting opportunity in mid-February to get full service next year.
However, it can take more than vaccines. Officials are discussing how to completely and permanently rewrite the rules of crisis response – and specifically how many and which elements of the Biden government’s proposed $ 1.9 billion rescue plan must be approved.
Fiscal leaders set aside many old totems last year, including fear of government debt and an obsession with ‘moral danger’ – the bad incentives that can create huge benefits for the public or corporate bailouts. For Republicans, this means approving initial unemployment insurance benefits that often exceed a laid-off worker’s salary; For Democrats, that meant helping airlines and temporarily relaxing banking regulations.
It worked, and so well that a strange consortium of doubters came forward to ask how much more is needed: Republicans arguing should focus only on the needy, and some Democrats are worried that so much more government spending in an economy ready to accelerate. can fuel inflation or problems in financial markets.
However, if the outlook improves, it is expected that government support will continue at levels sufficient to complete the work.
‘Rock on’, Bank of America analysts wrote in a February 22 note to increase their GDP growth forecast by 6.5% for the full year, a result of the $ 1.7 billion approval in additional government relief, ‘unequivocally positive’ health news and stronger consumer data. Given all this, “we expect the economy to accelerate further in the spring and really come alive in the summer.”
And the view back at VRBO? At most leading vacation spots, Hurst said, “You will not be able to find a home.”
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