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Can economy return to pre-pandemic strength? – Orange County Register

The pandemic binding on California’s economy officially lasts 452 days, from a complete blockade beginning in March 2020 to a business world reopened after June 15.

The economic sacrifice of the strict obligation to delay the spread of COVID-19 was significant. Over the next few years, there will be a grand debate about the government’s pandemic policy. Here are some numbers that can help you depict the economic debris.

Since learning the term “coronavirus,” California’s workforce has declined by 1.4 million. Yes, California’s economy is huge and recovering, but April employment is only 92% of its pre-pandemic level in February 2020.

Only five states, Hawaii, New York, Nevada, New Mexico, and Massachusetts, and Washington, DC, are further behind.

Remember what the limits of business were fighting: a pandemic that killed nearly 64,000 Californians. In addition, the number of deaths per capita is below the national average and above 30 states.

In California this year, many companies have been able to slowly return to normal. The “official” resumption of commerce on June 15 will be a great opportunity to reverse much of the financial pain.

Like other financial pivots, the impact is not universal.

For many niches that are already approaching the pre-pandemic pace, it may be a business as usual. For some industries, it will be a coveted lifeline. Also, for certain companies, reopening can herald a surprising challenge.

Let’s take a look at California’s potential winners and losers when Throttle goes out of the economy.

winner

Unemployed choice

There are 676,000 more people in California who are “officially” unemployed than they were just before the coronavirus disrupted the economy.

A complete resumption should mean that the unemployed have more options for work. Jim Wilcox, a professor of economics at the University of California, Berkeley, said employment opportunities could open up in the manufacturing industry.

He says companies that make the missing products will hire. One example is the limited inventory of computer chips that are as important to our car as the engine.

“If you’re missing some chips, you can’t make that car,” Wilcox says.

More fun from now on

If the business succeeds in the reopened economy, it is the leisure industry.

Blockades and widespread resistance to travel have hit the state’s tourism business in the last 14 months.

California’s hotels, amusement attractions, recreational facilities and recreational facilities combined have reduced the employment of 303,000 people during the pandemic era. This “fun” industry accounts for only 62% of pre-virus personnel.

The resumption will motivate travel and reduce attendance restrictions, which will be a great boost to employers.

“The coastal hotel achieved the highest revenue ever in May, so when it’s fully opened, it just adds another match to the fire,” said Atlas Hospitality tourism expert. Alan Reay says.

For a full-service business hotel, “it will take some time, but future bookings will start to skyrocket,” he says.

Replenishment office

The transition from a pandemic “working from home” to a traditional workplace brings many vacant office spaces back to life.

According to JLL’s brokerage firm, San Francisco had 16.7% of offices open in the first quarter of 2021, compared to 5.2% at the end of 2019. In Los Angeles, there are currently 17.5% vacancies, but before the pandemic it was 13%.

Yes, there are many speculations about how many workers will return to their old workspaces. And it’s not just from your boss.

In a JLL survey of 3,000 workers, 33% of employees wanted to end WFH, up from 28% in October 2020. The desire for remote work decreased from 1.9 days in October to 1.5 days a week.

June 15 means that many employers will haveten their return to the office, says Peter Belisle, JLL’s Director of Southwestern US Markets.

“Office landlords have more tours with prospective tenants and less sublease space,” he says.

Indoor dining

The virus changed where we ate. It’s a world of fast food takeaway.

Look at employment in the sector. “Limited service” jobs in restaurants throughout the state are 90% of pre-pandemic staffing levels, compared to 69% in full-service restaurants and 60% in bars.

According to a survey by restaurant financier Trinity Capital, fast food chain sales fell 4% in a year, compared to 10.5% for competitors.

Seated restaurants competed for good take-out food and delivery. The reopened dining room will attract more customers indoors. Offering more drinks and selling more side dishes and desserts will boost the profits of the owner.

“When the dining room began to open in May, some of the restaurant sales enjoyed by the (Quick Serve) segment began to slowly but steadily move to seated restaurants,” Trinity Capital said. writing.

loser

Employer: Need help

When you resume, your employer may think, “Be careful what you want.”

Where are the workers servicing this influx of new customers?

Labor shortages have forced some employers to compete for staff using incentives such as wage increases to seduce new hires. Recent unemployment trends may tell us more about why it’s so difficult.

Employment costs for bosses in Southern California rose 4.8% in the year ended in March. This is the largest surge in the United States, according to the federal index. The total unemployment rate in April in the region was 9.2%.

But in the Bay Area, costs rose by only 2.1% and the unemployment rate was only 5.6%.

Professor Wilcox has not argued that the expansion of unemployment benefits is keeping workers away from the job market, especially in hospitality and construction. Rather, he thinks, “There is a better job to make things at a higher wage.”

Home binge slows down

Home or refi shopping? Get cheap funding for the pandemic while it lasts.

Historically low prices fueled buying turmoil, pushing the average selling price of existing California homes to a record $ 813,980 in April. This has increased by 40% since February 2020.

“Our expectations are that the market will remain strong, but will fall into a healthier, less feverish pace in the coming months,” said Ali Wolf, Chief Economist at Zonda.

Remote school education and telecommuting have led many households to look for larger settlements, sometimes in remote communities. Will some of this demand slow down when we return to the office?

In addition, soaring home prices have created affordable concerns. Monthly home payments are increasing because lower interest rates are not equal to higher rates. And a nation’s worthy resumption should generate enough economic momentum to boost mortgage rates, further eroding the notion of affordability.

“When rates go up, range and speed are very important,” Wolf says. “A gradual rise can favor housing and invite bystanders to dive in. A rapid and meaningful rise will cool the market rapidly.”

Drivers Double Warmy

Gasoline prices are unseen in seven years (you can save two weeks in 2019), but buying a car can be even more painful for your wallet.

According to federal energy statistics, the average gallon of regular gasoline in California was $ 4.08 last week, up $ 1.44 or 55% from the pandemic lows.

The driver will see the reopening further fill the highway and parking lot. All this trip put crude oil, the main ingredient, at the highest price since the fall of 2018. Increased supply can stabilize the price of pumps-or lower them a bit.

“From an inventory perspective, there’s a lot of gas in the tank to support what people want to do,” says Stillwater Associates David Hackett.

If you need wheels, it’s hard to find a new car due to the lack of chips. Used cars are a popular item.

According to the iSeeCars purchasing service, average used car prices in California were 18.7% higher in April than they were 12 months ago. Only 15 states showed a greater increase.

Karl Brauer, Executive Analyst at iSeeCars, said:

Shoppers pay for

Do you remember the merchants lowering prices in the early days of the pandemic?

Discounts have been declining for months, and reopening should bring more customers to the store. Other business owners may raise prices to recoup the high costs of store inventory.

Look at local inflation. In Los Angeles-Orange County, inflation was 3.9% in May, the highest since October 2018. In the Bay Area, the latest 3.8% in April was the highest in two years. And it’s not just California. Nationally, May’s 5% inflation was the highest in 13 years.

The recovery from last year’s weakened locked-down economy is part of the story. However, some price increases will continue.

“We already have a lot of inflationary pressure, but resuming the economy will make it worse,” says Jim Dotty, a professor of economics at Chapman University.

Jonathan Lansner is a business columnist for Southern California NewsGroup.He can reach at jlansner@scng.com

Can economy return to pre-pandemic strength? – Orange County Register Source link Can economy return to pre-pandemic strength? – Orange County Register

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