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Economic insights: COVID-19
Anna Miller & Ryan Roth04.28.2020
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Macroeconomic Summary
Update on the CARES Act
Unemployment
Gross Domestic Product
Price of Crude Oil
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The CARES Act
Note: All figures are in billions of USD. Original Relief package, shown here, was enacted on March 27th.
Emergency Grants$10
Forgivable Loans$350
Relief for Existing Loans $17
Small Business Relief Programs
Additional Funding (enacted April 24th):
• $320 billion for the Paycheck Protection
Program (PPP)
• $60 billion for SBA disaster loans
• $75 billion for hospitals
• $25 billion for Public Health and Social
Services Emergency Fund
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SBA loans by sector
Construction (23)13.12%
Professional, Scientific, and
Technical Services (54) 12.65%
Manufacturing (31-33) 11.96%
Health Care and Social Assistance (62)
11.65%Accommodation and Food Services (72)
8.91%
Retail Trade (44-45)8.59%
Wholesale Trade (42)5.69%
Other Services (81)5.17%
All other 22.26%
SHARE OF APPROVED DOLLARS BY SECTOR
• Distribution is a reflection of (1) need, (2) familiarity with the loan approval process and/or (3) existing relationship with lenders
• Program has endured criticism as large chains and publicly traded companies have been awarded funding
• Sole proprietors, self-employed individuals and nonprofits are eligible for funding
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United States GDP growth
2020 GDP growth: -6.10%• GDP loss to be larger than in 2009• GDP contraction expected to be
significant in Q2• Annualized growth 2015-2020
projected at 0.6%
Global Growth• IMF announces global recession of
unmatched severity• Total global output to fall 3.0% in
2020• Recovery still expected to occur
sometime in 2021
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Unemployment
2020 projected unemployment: 8.9%• Unemployment expected to peak
in Q2 at 13.1%• Jobless claims approach
26 million• Hospitality, leisure and food
services hit particularly hard2021 projected unemployment: 6.5%
• Rebounded expected relatively quick
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Oil price collapse
• Low oil prices are reflection of low level of economic activity combined with no initial change to production
• Production cuts reached on April 9th, known as OPEC+ to begin May 1st
• Oil prices signal extent of economic decline for the industries that rely on it
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Industry Revenue Forecasting
• Data is fluid and ever-changing
• Analysts consider both macroeconomic and industry-specific trends
• COVID-19 pandemic increasing range of projections for industry revenue point estimates
• Forecast estimates provide general direction industry revenue will likely follow
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Sector Analysis
Commercial Real Estate
Residential Real Estate
Residential Construction
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Commercial Real Estate
• US office vacancy relatively low and expected to increase
• Cash flow crunch amid uncertainty and slowdown in business activity
• Retail vacancy surging with e-commerce activity on the rise
• Work-from-home movement
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Residential Real Estate
• Existing home sales expected to decline in 2020 Q2 amid relatively low housing supply and high housing prices
• Tightening access to credit and lending
• Increase in mortgage forbearances
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Residential Construction Activity
• Interest rates expected to remain relatively low
• Residential construction activity expected to partially benefit by low mortgage rates and relatively low housing supply
• Relatively high housing prices of existing homes may lead to increased demand for new home construction, but more likely delay of projects until 2021 and beyond
• 2020 growth expected to be hindered by rise in unemployment and overall economic uncertainty
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For More Information
www.ibisworld.com
www.ibisworld.com/industry-insider/us/
www.ibisworld.com/coronavirus-industry-exposure/