On Good Friday, the Labor Department reported that U.S. employers added a seasonally adjusted 916,000 jobs in March. Economists expect further positive news as more people get vaccinated against Covid-19, states remove restrictions on business activity, and consumers start traveling and shopping outside their homes. Unemployment fell to a pandemic low of 6%.
Although we appreciate the recent spate of good news, Pew Research revealed Covid-19’s lasting damage. Half of non-retired adults said that the pandemic will make it harder for them to achieve their long-term financial goals. They worry that it will take them at least three years to return to their before Covid financial status.
Beth Bovino at S&P Global said, “There is a seismic shift going on in the U.S. economy. The confluence of additional federal stimulus, growing consumer confidence and the feeling that the pandemic is close to abating is propelling economic growth and hiring.”
Hiring increased on many fronts. Restaurants, motels, construction, and schools employed more people. More traveling will benefit tourist areas such as Nevada, Hawaii, and Florida.
Economists bullishly project employment will increase over 500,000 per month during the next year. States that imposed lighter restrictions should experience relatively higher job growth.
The Federal Reserve forecasts average GNP growth of 6.5% this year. The central bank relieved stock market participants by promising to continue to keep borrowing costs near zero until after 2023. Federal Reserve Chairman Jerome Powell said that the central bank wants more proof of a complete recovery before altering its policies. Currently, the Fed remains focused on stimulating our economy.
Residential real estate throughout much of the country remains red hot. The Federal Housing Finance Agency posted year over year gains of more than 10% for all nine regions of the country. The following factors have spurred housing prices:
- Millions of millennials are entering their 30’s, the typical age for first-time buyers.
- Homeowners are staying in their homes longer because they remain healthier than their counterparts of previous generations.
- Mortgage rates remain at historic lows.
- The stimulus checks, forbearance on student loan payments, and less spending on travel and entertainment have enabled people to save up for down payments.
The economic consequences of Covid have varied depending upon one’s personal finances. Overall, 53% of U.S. adults now rate their personal financial situation as excellent or good. More than 86% of upper income adults and 58% of middle-income adults say their finances are in good shape. In contrast, 74% of lower-income adults believe their personal finances are only fair or in poor shape. The Pew Research Survey indicated that 66% of lower-income adults used the majority of federal stimulus payments to pay bills or for something essential.
Many Americans are worried about meeting their basic needs
- 30% have apprehensions about their debt
- 27% agonize about paying their bills
- 27% fret about paying their rent or mortgage
- 19% fear that they cannot buy enough food
Americans remain sharply divided about who has the greatest responsibility for guaranteeing their basic economic needs. 45% believe that the federal government has the primary responsibility compared to 33% who think their families have the greatest responsibility.
Jim O’Sullivan, U.S. macro strategist for TD Securities, summed up our mixed report card. “We expect recovery to resume within a few months, with the help of vaccines and fiscal stimulus, although we also expect the labor market to show significant net weakening for several years.”
What does our report card show after fighting the pandemic for over one year? In 1942 after the British routed Rommel’s forces at El Alamein (turning point of the North African campaign), Winston Churchill might have summed up our current status: “It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”
Originally published in the Sarasota Herald-Tribune
