Economic Data Show Potential for Rebound, But Dependent on Continued Reopening

Economic data released last week show a lot of potential for rebound—as long as the reopening can continue to proceed, according to Nareit Senior Economist Calvin Schnure.

Speaking July 20 on the Nareit REIT Report podcast, Schnure highlighted the range of economic indicators for June that were reported, including industrial production, retail sales, and housing starts. Those numbers underscore the possibility of getting the economy back to where it was before the pandemic, but “only as long as the virus is under control,” he said. News that the virus is surging in parts of the United States is creating tension in the market and threatens a pause or partial reversal of economic gains.

Schnure also discussed the potential for another round of stimulus. While details remain unclear at this point, the expiration of extended unemployment benefits at the end of this month gives some pressure to meet that deadline, he noted.

Schnure stressed that although another stimulus package can help businesses and households while significant parts of the economy remain shut down, these are really stop-gap measures until the health situation allows a more complete reopening.

At the same time, Schnure noted that while many households are struggling due to the economic downturn, others are in the fortunate position of having dry powder in the form of wages and unspent stimulus funds sitting in bank accounts that will continue to support them.

Meanwhile, markets continue to be subject to ongoing uncertainty, Schnure said. A key item to watch this week, he noted, will be the start of second quarter earnings. Although significant declines are already anticipated, investors and analysts will be focusing on management’s guidance for the rest of the year.

“The medium term outlook could be quite different from what we saw in the second quarter,” Schnure said, and could point to a recovery later this year or into 2021.