SAN FRANCISCO / WASHINGTON (Reuters) – Despite the near-accident of the US economy with a depression last year and an ongoing coronavirus pandemic that has practically paralyzed travel, Jeff Hurst, chief executive of the vacation rental company VRBO, sees a boom on the horizon.
“All the houses will be taken this summer,” said Hurst, while the expected protection from vaccines comes in line with the warmer weather, freeing a confined population with saved record savings. “There is a lot of accumulated demand for it.”
This kind of optimistic sentiment has increasingly taken root among executives, analysts and consumers who see the past year of comparative hibernation – from the closing of government-ordered deals last spring to the continued avoidance of risk by the public – giving way to a cautious resurgence and green shoots in the economy.
Data from AirDNA, a short-term rental analysis firm, showed that vacation bookings for late March, which traditionally coincide with college spring break, are just 2% below the pre-pandemic level. Job vacancies in the workplace are actually 4% above the pre-pandemic baseline. Data on retail traffic, air travel and customers sitting in restaurants has increased.
And economists’ forecasts have gone up en masse, with companies like Oxford Economics seeing an “increased” economy reaching 7% growth this year, more typical of a developing country.
In a symbolic milestone, Major League Baseball teams took to the pitch on Sunday, as scheduled, for the first games of the spring training season. The crowds were forced to observe the rules of social detachment and limited to about 20% of capacity, but the MLB has a full schedule drawn up after a truncated 2020 season that only started in July and saw teams playing in empty stadiums.
Avoided depression
As of February 25, about 46 million people in the United States had received at least their first dose of a COVID-19 vaccine – still less than 15% of the population and not enough to slow the spread of a virus that killed more. of half a million people in the country, according to the United States Centers for Disease Control and Prevention.
The emergence of variants of the coronavirus poses risks, and a return to normal life before immunity spreads could give the virus a new foothold.
Neither is optimism global. The European short-term rental market, for example, is suffering, with tens of thousands of Airbnb offers being withdrawn. About a fifth of the supply has disappeared in cities like Lisbon and Berlin, as owners and managers adapt to an agitated launch of vaccines and doubts about the resumption of international travel.
We did not experience the negative scenario that we were so concerned with in the first half of the year. We expect to return to a much better position in the second half of this year.
–Jerome Powell, President of the Federal Reserve
In the United States, the vaccine launch and a sharp decline in new cases produced an unthinkable economic outlook a year ago, when the Federal Reserve opened its emergency manual on a concise pledge for action and Congress approved the first of several rescue efforts. .
The fear, then, was years of stunted 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 a record fiscal and monetary intervention led to an increase in personal income, something unprecedented in a recession.
“We are not experiencing the negative scenario that we were so concerned about in the first half of the year,” Fed Chairman Jerome Powell told lawmakers on Wednesday. “We have the perspective of returning to a much better position in the second half of this year.”
‘Rock on’
The US gross domestic product, the broadest measure of economic production, could surpass its pre-pandemic level this summer, approaching the “V-shaped” recovery that seemed unreal a few weeks ago.
That would still mean more than a year of lost growth, but it still represents a recovery twice as fast as the recovery from the 2007-2009 recession.
Jobs hasn’t been moving so fast. The economy remains about 10 million slots below where it was in February 2020, and that gap remains an urgent problem for policymakers, along with the total reopening of schools and public services.
It took six years after the last recession to reach its previous job spike, a glacial process that officials desperately want to shorten.
While the past few months have seen little progress, the outlook may be improving. Treasury Secretary Janet Yellen said in mid-February that the country had a chance to fight for full employment next year.
More than vaccines may be needed, however. Authorities are debating how to completely and permanently rewrite crisis response rules – and specifically how much and what elements of the $ 1.9 trillion bailout plan proposed by the Biden government to approve.
Fiscal leaders last year brushed aside many old totems, including fear of public debt and a concern about “moral hazard” – the bad incentives that generous public benefits or corporate bailouts can create. For Republicans, this meant approving initial unemployment insurance benefits, which often exceeded the wages of a dismissed worker; for Democrats, it meant helping airlines and temporarily relaxing banking regulations.
It worked, and so well that a strange consortium of doubtful ones emerged to question how much more is needed: Republicans arguing that aid should be directed only to those in need, and some Democrats concerned that much more government spending in an economy ready to accelerate can trigger inflation or problems in the financial markets.
If the outlook is improving, however, government support is expected to continue at adequate levels to complete the work.
“Rock on,” Bank of America analysts wrote in a February 22 note raising their year-round GDP growth forecast to 6.5%, a result based on the approval of $ 1.7 trillion in government relief additionally, “unequivocally positive” health news and stronger consumer data. Given all of this, “we expect the economy to accelerate further in the spring and really come to life in the summer.”
And the view back to VRBO? At most major vacation spots, Hurst said, “You won’t be able to find a home.”
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