It is natural for us to be worried as the world faces the coronavirus pandemic. Along with the serious health issue confronting us, its impact on the world economy has also made many people anxious.
Adding to people’s anxiety is the media’s tendency to focus on the negative side of anything, knowing that bad news sells. We’re likely to see more gloom and doom headlines in the months ahead, so we better ensure that we read the full story before we make decisions.
For health issues, we should look to reliable sources like the Centers for Disease Control and Prevention (CDC) or the World Health Organization (WHO) for trustworthy information.
But it’s more challenging to look for credible information about the pandemic’s economic impact. It’s important to take a good look at the situation. We’re now seeing some disturbing headlines. Here are two of them:
Goldman Sachs Forecasts the Largest Drop in GDP in Almost 100 Years
An initial look at that headline might lead us to think, “Are we headed for an economic collapse?!”
While it’s true that Goldman Sachs predicts that the economy will decline in the next few months, it also anticipates that the economy will be in much better shape in the second half of the year. GDP is expected to be up 12% in the third quarter and another 10% in the last quarter.
This assessment echoes the research by John Burns Consulting on pandemics, the economy, and home values:
“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices), and some very cutting-edge search engine analysis by our Information Management team showed the current slowdown is playing out similarly thus far.”
Fed President Predicts 30% Unemployment!
What James Bullard, President of the Federal Reserve Bank of St. Louis, actually said was that unemployment “could” reach 3%. In a Bloomberg News interview, he also stated that:
“This is a planned, organized partial shutdown of the U.S. economy in the second quarter. The overall goal is to keep everyone, households, and businesses, whole with government support.”
“I would see the third quarter as a transitional quarter” with the fourth quarter and first quarter next year as “quite robust” as Americans make up for lost spending. “Those quarters might be boom quarters.”
Headlines are meant to catch readers’ attention. Know the full story to get the real picture. If we’re not careful in analyzing what we read, we will likely be misinformed.
Hidden from the alarmist headlines are predictions stating that the economy will make a recovery after a tough first half. Call your local real estate agent for advice on the current housing market situation.