SAN FRANCISCO / WASHINGTON (Reuters) – Despite the near-crisis of the US economy with a depression last year and an ongoing coronavirus pandemic that has virtually brought travel to a halt, Jeff Hurst, CEO of vacation rental company VRBO, sees a boom on the horizon .
“Every home will be taken over this summer,” Hurst said, as the expected protection from vaccines comes along with warmer weather, creating a trapped population with record savings. “So much demand has been built up for it.”
Those kinds of optimistic sentiments have increasingly taken root among executives, analysts and consumers who see the past year of comparative hibernation – from last spring’s government-mandated company closures to continued public risk aversion – giving way to a cautious resurgence and green shoots in economics.
Data from AirDNA, a short-term rental analytics company, showed that holiday bookings for the end of March, which traditionally coincide with spring school breaks, are only 2% below their pre-pandemic levels. Job openings on Indeed job site are 4% above a pre-pandemic baseline. Data on retail pedestrian traffic, air travel, and seated dining in restaurants are all up.
And economists’ forecasts have skyrocketed, with companies like Oxford Economics seeing a “pent-up” economy at 7% growth this year, more typical of a developing country.
In a symbolic milestone, Major League Baseball teams took to the field on Sunday for the first games of the spring training season. Crowds had to abide by social distance rules and were limited to about 20% capacity, but MLB has set a full schedule after a cut 2020 season that didn’t start until July and saw teams play in empty stadiums.
Avoided depression
By 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 dampen the spread of a virus that killed more . than half a million people in the country, according to the U.S. Centers for Disease Control and Prevention.
The emergence of coronavirus variants carries risks, and a return to normal life before immunity is widespread could give the virus a new foothold.
Optimism isn’t global either. For example, the European short-term rental market is struggling, with tens of thousands of Airbnb listings. Up to a fifth of supply has disappeared in cities like Lisbon and Berlin, as owners and managers adjust to a choppy vaccine rollout and doubts about the resumption of cross-border travel.
We don’t live the downside of worrying so much about the first half of the year. We look forward to returning to a much better place 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 have led to an economic outlook that was unimaginable a year ago when the Federal Reserve opened its emergency booklet in a terse pledge of action and Congress the first of several rescue efforts approved.
The fear then was years of stunted production, similar to the Great Depression of the 1930s, with some projections killing millions and foreseeing a prolonged national quarantine. Instead, the first vaccines were distributed before the end of 2020, and a record of fiscal and monetary intervention led to an increase in personal income, unheard of in a recession.
“We’re not living the downside of worrying so much about the first half of the year,” Fed Chairman Jerome Powell told lawmakers on Wednesday. “We look forward to returning to a much better place in the second half of this year.”
‘Rock on’
US gross domestic product, the broadest measure of economic output, could surpass pre-pandemic levels this summer, approaching the “V-shaped” rebound that seemed unrealistic a few weeks ago.
That would still mean more than a year of lost growth, but despite this, the recovery is twice as fast as the recovery from the 2007-2009 recession.
Jobs have not followed that quickly. The economy lags behind its February 2020 levels by about 10 million positions, and that gap remains an urgent problem for policymakers, in addition to fully reopening schools and public services.
It took six years after the latest recession to reach the earlier employment peak, a frosty process that officials are desperate to shorten.
Although little progress has been made in recent months, the outlook may improve. Finance Minister Janet Yellen said in mid-February that the country had a chance to achieve full employment next year.
However, it may require more than vaccines. Officials are debating how to completely and permanently rewrite crisis response rules – and specifically how many and what elements of the Biden government’s $ 1.9 trillion bailout plan proposed by the government should be approved.
Tax leaders cast aside many old totems last year, including fear of government debt and a preoccupation with “moral hazard” – the bad incentives that can create generous government benefits or corporate bailouts. For Republicans, that meant approving initial unemployment insurance policies that often exceeded the salary of a laid-off worker; for Democrats, it meant helping airlines and temporarily relaxing banking regulations.
It worked, and so well that a curious consortium of doubters wondered how much more is needed: Republicans who argue that aid should only target those in need, and some Democrats worry that there is so much more government spending in an economy that is ready to accelerate. can cause inflation or problems in the financial markets.
However, if the outlook improves, it is expected that government support will continue at a level sufficient to get the job done.
“Rock on,” Bank of America analysts wrote in a Feb. 22 note, raising their full-year GDP growth forecast to 6.5%, an outcome projecting approval of $ 1.7 trillion in additional government support , “unequivocally positive” health news, and stronger consumer data. Given all this, “we expect the economy to accelerate further in the spring and really come to life in the summer.”
And the view back at VRBO? At most prime vacation spots, Hurst said, “You won’t be able to find a home.”
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