Housing and Manufacturing Lead the Economic Recovery
According to the Department of Labor's jobs report from Thursday, January 21, the number of Americans filing for unemployment compensation decreased a little over the past week. The COVID-19 pandemic continues to infect hundreds of thousands of Americans every day. The ongoing pandemic has ravaged entire industries, but it has mostly helped both housing and manufacturing. These two segments of the economy seem to be holding together the economy overall, but the recovery is perilous.
Housing Remains Strong
New housing starts and permits for future single-family homes grew in December. According to the January 21 report, the new housing starts were higher last month than they were in any other month since December 2006. Manufacturing is also strong. American manufacturers reported a big boost in new orders in the past month.
Which Sectors Are Faltering
The service sectors of the economy have been dealt the hardest blow of the COVID-19 pandemic. This has resulted in serious financial consequences to low-wage earners.The recovery is K-shaped, explain some economists. This means that better-paid workers are doing well as the pandemic continues, but lower-paid workers are losing out on the gains that have been made in the recovery thus far. The economic recovery and quashing of the pandemic are likely to be President Biden's two biggest challenges during the first 100 days of his presidency.
Why the Housing Market Is Strong
There are several reasons why the housing market is going through a big boom. The first reason is low interest rates. The Federal Reserve has set the interest rate to 0 or near-0 for more than two years. Another reason is that people want more space. As people are staying home to work or go to school, they need more space. People who can work from home may want to relocate out of congested areas of cities. People are also engaging in more additions, remodeling and upgrades of their homes. There is a dearth of available homes for sale. The inventory has ranged from just one to three months in most of the country. A stable housing market usually has a six-month supply of available existing and new homes for sale.
Economic Advisors Encourage President Biden to Act Big and Quickly
Economists hope that the United States Congress will approve President Biden's huge economic stimulus plan. The president's plan calls for a $1.9 trillion relief package. It would help tame the virus, stabilize the economy and prevent long-lasting economic consequences to individuals, families and small business owners. The economic damage that has already occurred could get worse if Congress doesn't act.
Housing Is the Economy's Foundation Right Now
Housing starts are growing. This growth is keeping people employed. More people are interested in buying homes or upgrading their existing homes. That has led to more sales of home decor, furniture, paint and appliances. Building supplies and delivery services are also on the rise. Craftspeople and tradesmen and women are also seeing an increase in demand for services. This means that housing is driving a boost in the demand for home service providers, including electricians, carpenters, plumbers, masons and similar professionals. The pandemic has inspired people to improve, upgrade and upsize their living arrangements.
Housing Market Is Expected to Remain Strong
Economists expect the housing market to remain strong and have a fast rate of growth at least through the second quarter of 2021. The market may slow its growth rate for the third and fourth quarters of the year, but it is unlikely to have any negative growth. This means that those in construction, supply, specialty trades, surveying, inspections and permitting will have a lot of work to do.
Why People Are Buying Houses During a Pandemic
People who have been renting for a while may have been able to save more money during the pandemic, especially those who work in industries that weren't adversely affected by the closures. Saving more allows these people to put more money down on the home. People who have been working from home want a dedicated workspace or need one in order to do their jobs well. If a household includes children who have had to do their schooling from home, there may be a need for a dedicated learning space. People are also hoping to have yards to enjoy. With limits on travel, staycations in a nice backyard are a safe and healthy alternative.
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