The ongoing COVID-19 pandemic continues to dominate the headlines. Some states are finally starting to open back up, while others are committed to a few more weeks, at least, of the stay-at-home order. Investors and markets across the world wait in limbo for daily updates.
The Labor Market
Unemployment has finally dropped to pre-recession levels wiping out all the job gains in the U.S. since 2009. Last week, 4.4 million new unemployment applications were filed bringing the total to over 26.5 million because of the COVID-19 pandemic. This is over 16% of the labor force.
Economists expect the rate of applications to start shrinking as we near a peak in the coming weeks. Further job loss will be dependent upon the rate at which states and the federal government are able to reopen businesses and excite economic activity.
Consumer Activity Worsens
With most businesses currently closed and unemployment rising, consumer activity continues to worsen. Consumer spending generally accounts for 70% of all the United States’ economic activity.
Although growth has been seen in groceries and pharmacies, overall retail sales dropped 0.4% from January to February and 8.7% from February to the end of March. This was to be expected with the shutdown but still worrisome, nonetheless.
The Housing Market
The housing market continues to dampen as well. New housing starts dropped 22% from February through March and building permits, a signal for future construction, dropped 7% during the same time. Despite these losses, both are at higher levels than just one year ago.
Existing home sales hit a decade-high in February but dropped 9% in March. Economists expect this trend to continue until the entire economy begins to reopen.
Part of the $2 trillion stimulus package announced in March included forbearance and mortgage relief for Americans with federally backed mortgages. Private lenders were encouraged to provide relief, but policy specifics were variable.
Mortgage rates have been relatively stable since the Fed cut the prime rate to 0% in early March, although they are higher than expected. This is likely a result of the market being flooded with refinancing applications in early March. Many lenders raised rates to meet demand.
Treasury yields remain near all-time lows and the Fed continues to buy large amounts of mortgage-backed securities.
Action by the Fed
The budget for small businesses in the first $2.2 trillion stimulus package has already been depleted. Congress and the President are working to provide more funding to help small businesses during the crisis.
The latest package is worth $484 billion. This stimulus provides more relief for small businesses to keep employees on the payroll. Money is also set aside for testing, hospitals, and an Economic Injury Disaster Loan program, which includes support for farmers and ranchers.
The Federal government has already begun outlining plans to reopen the economy, although the final decision rests with the individual governors. Some states have begun to reopen parks and small businesses. Others have increased the length of their stay-at-home order and legislated mask-wearing in public.
The economy continues to sit idly by until a clear picture becomes more visible.
For further information on the loan and real estate market, get in touch with one of the title and escrow specialists at Plymouth Title Guaranty Corporation.
Information accredited to MBSQuoteline.
Please note: The safety of our staff and clients is our highest priority. Effective immediately, Plymouth Title Guaranty Corp. will be taking the following precautions to limit the spread of the COVID-19 virus:
All purchase transactions need to take place at a Plymouth Title Guaranty Corp. closing office
- If a party to the closing is not feeling well, please contact your closer prior to the closing so appropriate precautions can be taken;
- We ask visitors to utilize the restroom in our building upon arrival to thoroughly wash hands before entering our office;
- Only individuals required to sign and/or deliver documents at closings will be allowed in our office. Specifically, closings will be limited to borrower(s), seller(s), agents, and lenders;
- All pens used in the closing will be given to the client after use;
- All closing rooms will be cleaned and disinfected in-between each closing;
- Those picking up checks at our office will be instructed to call our main line and request to speak to a staff member who will make arrangements for delivery to the lobby or parking lot of our office; and
- All staff will refrain from shaking hands before or after closings and ask clients do the same
Please be advised that our staffing may be impacted during this unprecedented event. While we are committed to continuing to provide outstanding service, we ask for your patience in the face of this pandemic.
This is a fluid situation and we will continue to adjust our protocols as necessary while following the CDC guidelines.