Three Factors Shaping the Next Stage of U.S. Economic Recovery

October 30, 2020

Three Factors Shaping the Next Stage of U.S. Economic Recovery

October 30, 2020

The fast pace of economic recovery is beginning to wind down as pandemic relief talks remain at a halt, and COVID-19 cases are beginning to resurge in different parts of the country. In some states and metros, plans to begin a new round of tighter restrictions on businesses are already underway or are in discussion.

Unfortunately, with the progress of the pandemic being so different in each state, it is difficult to pin down exactly how far the country is from turning the corner on this health care crisis as a whole.

Thankfully, there are a few factors at play that will impact the shape of the recovery on a national scale. This week we took a closer look at some of the short-term events playing out that we expect to have a significant impact on how long it will take for the country to get back to full strength.

Results of the Presidential Election

There’s a good chance that the rate of economic recovery speeds up no matter who wins the 2020 Presidential election.

If President Trump remains in the White House, expect COVID-19 responses to continue to be driven by state leadership. Consider this new wrinkle: with election-related political pressures in the rearview mirror, some governors and mayors may be more inclined to ramp up restrictions if new cases are surging under their watch.

If former Vice President Biden is elected, expect the dissemination of a national recovery plan that may or may not increase restrictions in some metros where new case counts are on the rise. Either election night scenario may result in new hurdles for recently opened businesses, but these burdens could be offset with additional unemployment aid from Congress in 2021.

Consumer Confidence vs. Winter Weather

Some experts are expressing concerns about how the approaching cold weather will impact the spread of the COVID-19 virus. In particular, health care professionals are worried that the cold weather will encourage more individuals to spend time together indoors. Additionally, winter chills and allergies can make individuals more susceptible to respiratory illness in general.

That said, will cooped-up individuals who have just spent the summer in quarantine be ready to risk the consequences, especially with holiday shopping season just around the corner? It’s hard to guess how the next two months will play out. If shoppers are responsible, local economies could see a bump in spending without an accompanying outbreak. On the other hand, the rate of economic recovery inevitably slows if Black Friday becomes a national superspreader event.

Progress on Vaccine Availability

The biggest wildcard on the table is the success of vaccine development efforts. Though there will be a delay between the discovery of a vaccine and its distribution to the general populace, confirmation of an end in sight will be a major boost for the stock market and encourage cautious investors to get off the sidelines.

  • Cambridge-based biotech company Moderna recently announced that it had completed enrolling participants for its late-state trials and is gearing up to begin distributing 20 million doses of the vaccines worldwide sometime this year.
  • British pharmaceutical company AstraZeneca announced positive results on October 26, reporting encouraging progress toward eliminating virus symptoms in older and younger adults alike. The company is aiming to develop a vaccine by the end of 2020.
  • Efforts by Pfizer and BioNTech to develop a vaccine are currently taking longer than expected. The company originally aimed to have a vaccine developed by the end of October.

We at Berkadia will continue to monitor the COVID-19 pandemic and its impact on the multifamily market. Visit our Research and Resources portal for in-depth coverage of how individual major metros are experiencing economic recovery as they work to manage the virus outbreak.