The Most Hopeful Recession

The Most Hopeful Recession

June 4, 2020 Off By Chris

I just read an article that Costar published called “The Most Hopeful Recession.” The article noted that the current recession (aka, the “Lockdown Recession”) is very unique for a number of reasons and I’ve shared the graphs so you can see what they showed in the article.

The first area of discussion was consumer confidence. Typically, when in a recession, the expectation is that both consumer and business confidence is down and that isn’t what we’re seeing right now. The graph below shows consumer confidence during the recession we had in 2008 (to the far left) compared to a survey taken in 2009 (the middle graph) and how confidence today is totally different. The graph is obviously out of sync with what we saw in 2008. The article also noted that,

“Consumer confidence in the future is high. In May of 2020, consumers expect conditions six months from now to improve at a similar rate as a year ago.”


Consistently tracking with our theme of anomalies, the chart below shows income and spending for April. We expect to see spending down but we don’t expect to see income up! The article said that they were unable to find a time when this scenario occurred and they looked all the way back to the 1950’s.

So, where is this income coming from? If you look at this next chart, you’ll see that the stimulus income is covering the loss of income that everyone is experiencing. The yellow section is the government transfers that happened in April. So, the take away here is the government stimulus is temporarily covering the household income loses.

The next area that was reviewed was to look at what everyone is doing with their new income? The chart below shows that households are saving a record amount of new income which isn’t the norm in a recession. Usually, you don’t see a spike in savings in a recession but here, we do.

The whole article started with looking at consumer confidence and now we can see why the consumer confidence is high, it is because of the increase in income. Furthermore, the article notes that,

“Most of those who lost jobs in April considered their loss temporary. And the government is sending them checks.”


The PPP (Paycheck Protection Program) loans have had an impact. The chart below shows the rehiring figures by state. The claims have decreased and this chart shows you where that’s happening.

With rehiring underway, we expect to see a drop in unemployment which will mean that we are on the road to labor market recovery. While every state will post different numbers, it is a trend that everyone should be watching.

Finally, the article focused on some two other data sources. The final chart looks at data that was obtained from a timesheet provider called Homebase and the Harvard-based economic research and analytics shop Opportunity Insights. As you look at the graph, the states that are to the far right are better than the far left. This chart compares data from January 2020 to present day. As a example, when you see California on the chart, you will see that its employment is off by about 50% compared to South Dakota which is employing slightly more than in January 2020. This graph will be interesting to watch on a monthly basis to see how each state improves.

In closing, there is hope that we will see a rebound in the upcoming months. The “Lockdown Recession” may be at its greatest impact (some experts think we’ll see that in the next couple of weeks) but the expectation would be that things will begin improving soon. Let’s hope for the best and keep watching the trends.

If you need help with your real estate, know of someone that does, or have any questions about this article, please don’t hesitate to give me a call (925-239-1422). I look forward to hearing from you.