2020 has been one of the most challenging years many of us can remember, and that certainly applies to the job market here in Northern Michigan.
Earlier this month, the Bureau of Labor Statistics (BLS) released their most recent Jobs Report. The report revealed that the economy lost 140,000 jobs in December. That’s a devastating number and dramatically impacts those households that lost a source of income. However, we need to give it some context.
Greg Ip, Chief Economics Commentator at the Wall Street Journal (WSJ), explains:
“The economy is probably not slipping back into recession. The drop was induced by new restrictions on activity as the pandemic raged out of control. Leisure and hospitality, which includes restaurants, hotels, and amusement parks, tumbled 498,000.”
In the same report, Michael Pearce, Senior U.S. Economist of Capital Economics, agreed:
“The 140,000 drop in non-farm payrolls was entirely due to a massive plunge in leisure and hospitality employment, as bars and restaurants across the country have been forced to close in response to the surge in coronavirus infections. With employment in most other sectors rising strongly, the economy appears to be carrying more momentum into 2021 than we had thought.”
Once the vaccine is distributed throughout the country and the pandemic is successfully under control, the vast majority of those 480,000 jobs will come back.
Here are two additional comments from other experts, also reported by the WSJ that day:
Nick Bunker, Head of Research in North America for Indeed:
“These numbers are distressing, but they are reflective of the time when coronavirus vaccines were not rolled out and federal fiscal policy was still deadlocked. Hopefully, the recent legislation can help build a bridge to a time when vaccines are fully rolled out and the labor market can sustainably heal.”
Michael Feroli, Chief U.S. Economist for JPMorgan Chase:
“The good news in today’s report is that outside the hopefully temporary hit to the food service industry, the rest of the labor market appears to be holding in despite the latest public health challenges.”
How is This Playing Out in Northern Michigan?
The restrictions on food service and hospitality have been extremely challenging for our area. With an economy that relies heavily on tourism and leisure, the mandated shutdowns have triggered a disproportionately high number of layoffs and furloughs locally.
However, there is cause for optimism. With the recent updates to the state’s pause orders, updates that include the return of indoor dining under certain restrictions as well as non-masked service activities, it could be that our area is through the worst of the economic effects.
What impact will this have on the real estate market in 2021?
Some are concerned that with millions of Americans unemployed, we may see distressed properties (foreclosures and short sales) dominate the housing market once again. Rick Sharga, Executive Vice President at RealtyTrac, along with most other experts, doesn’t believe that will be the case:
“There are reasons to be cautiously optimistic despite massive unemployment levels and uncertainty about government policies under the new Administration. But while anything is possible, it’s highly unlikely that we’ll see another foreclosure tsunami or housing market crash.”
For the households that lost a wage earner, these are extremely difficult times. Hopefully, the new stimulus package will lessen some of their pain. The health crisis, however, should vastly improve by mid-year with expectations that the jobs market will also progress significantly.
If you’re ready to talk about buying or selling a home in Northern Michigan, the Brick & Corbett team is here to help. We’ve got decades of experience buying and selling just about every property type at just about every price point. We’re ready to put our expertise to work for you and those that matter to you, so reach out today to get started.