Wake Me Up When September Ends

It all comes down to September

In two short months we should know definitively whether or not the economy is coming back.

September 2021 marks the date when all the COVID policy anomalies muddying up the data end. We will see the end of unemployment benefits, the end of the eviction moratorium, kids back in school, and workers back in the office.

Since then we’ve been living in a COVID purgatory. Office buildings have been rented but empty. Apartments have had an untold number of people living rent free, workers have been living off unemployment, and 3.5% of mortgages are in forbearance.

Once September hits we will see two big things. The first is kids will go back to school. Parents who were not working or working from home for the reason of watching the kids will not have that excuse anymore. What we will learn is what the true demand for office space really is. Office commercial real estate could be in for a big decline if business decide they don’t need all that space and if workers opt to stay home. To a lesser extent we will see if childcare really is keeping a large amount of the population on the sidelines or if it is the enhanced unemployment benefits. Unfortunately for data scientists, those are ending at the same time.

If September goes well… The workers return to the office. This will help keep office prices stable. Secondly we see unemployment drop close to full employment. Allowing stimulus programs to end and the economy to start producing at full capacity again. If both these things happen, we can safely say that the U.S. economy is healthy and in recovery.

However, if it goes poorly…Worker stay home, business start to cut back on office space This causes office prices and the retail which depends on them to nose dive. At the same time workers continue to stay out of the labor force, successfully holding the economy hostage until they get more stimulus. If this happens we could be into a long winter and talking about a much larger recession on the horizon.