The year started out very economically promising—low unemployment, a soaring stock market, and an overall thriving economy. And then, the COVID-19 pandemic struck, forcing global closures, business shutdowns, and nationwide stay at home orders. The resulting 2020 unemployment rate has been more than just shocking…it’s also been almost historically high.
Soaring 2020 Unemployment Rate Isn’t Cause for Panic
Recently, the Bureau of Labor Statistics reported that the 2020 unemployment rate had climbed to 14.7%, up from an almost all-time low of 3.5% in 2019. And while that comparison may seem like more than a small black cloud in our sunny skies, we want to ensure you that the unemployment rate isn’t cause to panic. Here’s why.
It’s not like the Great Depression
Many news stories have likened the current economic downturn to that of the Great Depression, but this is certainly not the case. Between 1929 and 1933, the economy shrank for 43 consecutive months and unemployment climbed to nearly 25%.
This time, economists believe a rebound will happen much sooner—possibly even by the end of the year.
Predictions are much more positive
Economic predictions for this year and the coming years is a lot more positive—and much more reassuring—than numbers following the Great Depression. Unemployment rates in 1932 climbed from 23.6% to 24.9% in 1933, before slowly beginning to taper, reaching only 20.1% in 1935.
This time around, however, our 14.7% unemployment rate is anticipated to be about as high as it gets. By next year, rates could be at 8% or lower, and could return to 4% as soon as 2023.
This wasn’t a structural collapse
One of the biggest differences between 2020 and the Great Depression is that the Great Depression was an unplanned economic collapse and a breakdown of the financial system, whereas our current situation was a planned shutdown.
Today, as businesses begin to reopen and more and more people are able to return to work, those unemployment numbers should quickly begin to decrease, and a rebound of the economy should be almost immediate.
Almost 90% of job losses are temporary
One very positive factor to remember is the temporary nature of almost 90% of the unemployment experienced nationwide. Whereas prior recessions and depressions led to long-term job losses and business closures, these have been largely temporary. Here in the Triangle, many businesses are already beginning to reopen, and thousands of people have already returned to work.
The Economy Will Recover—And So Will You
The bottom line is that current unemployment rates and business closures are the result of a calculated and predetermined pause on the economy. Banks today are much stronger and better capitalized than in the day of the Great Depression. Unemployment provides assistance to families and individuals out of work. And businesses nationwide are already beginning to reopen. This is not the Great Depression.
Real Estate Is Still Strong
While the economy waffles, real estate has continued with little hesitation despite closures, restrictions, and social distancing orders. Much of the real estate process has moved online, but if you’re thinking of buying or selling a home in the Triangle area, it’s still more than possible!
Have questions or concerns about how the ongoing health crisis might have affected your real estate goals? Contact Linda Craft & Team at 919-235-0007 to learn more about how we can put our 350+ years of combined experience to work for you.