Fannie's Forecast Sees a Brightening Recovery; Stocks vs Bonds

Fannie Mae has upgraded its forecast for the third quarter gross domestic product (GDP). It now expects growth at an annualized pace of 30.4 percent , up from the 27.2 percent the company’s economists predicted in August. They say that growth has clearly slowed from the days soon after the business shutdowns and orders to shelter in place were gradually lifted by states and cities in May and June, but more recent data points to a continued recovery. It was originally thought that personal consumption expenditures would fall off significantly as expanded unemployment benefits expired, but they rose 1.6 percent in July, and early data for August suggest that growth continued. Auto sales, one component of the PCE, rose 4.5 percent and credit and debit card transactions appear to have increased
Fannie's Forecast Sees a Brightening Recovery; Stocks vs Bonds
Fannie's Forecast Sees a Brightening Recovery; Stocks vs Bonds

Home equity climbs amid the coronavirus pandemic

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Despite the hit to the economy from the coronavirus pandemic, homeowners are getting richer, at least house rich. CNBC's Diana Olick reports.

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Home equity climbs amid the coronavirus pandemic
Home equity climbs amid the coronavirus pandemic

National REIT Association Mid-Year Outlook: Real estate is seeing signs of a W-shaped recovery

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Calvin Schnure, senior vice president at the National Association of Real Estate Investment Trust, talks the assoication's midyear outlook on the state of the real estate industry.

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National REIT Association Mid-Year Outlook: Real estate is seeing signs of a W-shaped recovery
National REIT Association Mid-Year Outlook: Real estate is seeing signs of a W-shaped recovery

Is the Economic Recovery Beating All Projections?

Is the Economic Recovery Beating All Projections? | Simplifying The Market

Earlier this year, many economists and market analysts were predicting an apocalyptic financial downturn that would potentially rattle the U.S. economy for years to come. They immediately started to compare it to the Great Depression of a century ago. Six months later, the economy is still trying to stabilize, but it is evident that the country will not face the total devastation projected by some. As we continue to battle the pandemic, forecasts are now being revised upward. The Wall Street Journal (WSJ) just reported:

“The U.S. economy and labor market are recovering from the coronavirus-related downturn more quickly than previously expected, economists said in a monthly survey.

Business and academic economists polled by The Wall Street Journal expect gross domestic product to increase at an annualized rate of 23.9% in the third quarter. That is up sharply from an expectation of an 18.3% growth rate in the previous survey.”

What Shape Will the Recovery Take?

Economists have historically cast economic recoveries in the form of one of four letters – V, U, W, or L.

A V-shaped recovery is all about the speed of the recovery. This quick recovery is treated as the best-case scenario for any economy that enters a recession. NOTE: Economists are now also using a new term for this type of recovery called the “Nike Swoosh.” It is a form of the V-shape that may take several months to recover, thus resembling the Nike Swoosh logo.

A U-shaped recovery is when the economy experiences a sharp fall into a recession, like the V-shaped scenario. In this case, however, the economy remains depressed for a longer period of time, possibly several years, before growth starts to pick back up again.

A W-shaped recovery can look like an economy is undergoing a V-shaped recovery until it plunges into a second, often smaller, contraction before fully recovering to pre-recession levels.

An L-shaped recovery is seen as the worst-case scenario. Although the economy returns to growth, it is at a much lower base than pre-recession levels, which means it takes significantly longer to fully recover.

Many experts predicted that this would be a dreaded L-shaped recovery, like the 2008 recession that followed the housing market collapse. Fortunately, that does not seem to be the case.

The same WSJ survey mentioned above asked the economists which letter this recovery will most resemble. Here are the results:Is the Economic Recovery Beating All Projections? | Simplifying The Market

What About the Unemployment Numbers?

It’s difficult to speak positively about a jobs report that shows millions of Americans are still out of work. However, when we compare it to many forecasts from earlier this year, the numbers are much better than most experts expected. There was talk of numbers that would rival the Great Depression when the nation suffered through four consecutive years of unemployment over 20%.

The first report after the 2020 shutdown did show a 14.7% unemployment rate, but much to the surprise of many analysts, the rate has decreased each of the last three months and is now in the single digits (8.4%).

Economist Jason Furman, Professor at Harvard University‘s John F. Kennedy School of Government and the Chair of the Council of Economic Advisers during the previous administration, recently put it into context:

“An unemployment rate of 8.4% is much lower than most anyone would have thought it a few months ago. It is still a bad recession but not a historically unprecedented event or one we need to go back to the Great Depression for comparison.”

The economists surveyed by the WSJ also forecasted unemployment rates going forward:

  • 2021: 6.3%
  • 2022: 5.2%
  • 2023: 4.9%

The following table shows how the current employment situation compares to other major disruptions in our economy:Is the Economic Recovery Beating All Projections? | Simplifying The Market

Bottom Line

The economic recovery still has a long way to go. So far, we are doing much better than most thought would be possible.

Is the Economic Recovery Beating All Projections?
Is the Economic Recovery Beating All Projections?

Fewer Homes Being Flipped, But Profits Are Up; Forbearances Keep Shrinking

One out of every 15 home sales in the second quarter of the year were defined as “flips” by ATTOM Data Solutions. A flip is any arms-length transaction that occurred in the quarter where a previous arms-length transaction on the same property had occurred within the last 12 months. ATTOM’s second quarter report on flipping says 53,621 single-family homes and condos were flipped in the second quarter, 6.7 percent of total transactions. This is down slightly from 7.5 percent or one of every 13 transactions in the first quarter, but up from 6.1 percent or one in 17 in the second quarter of last year. While flipping declined slightly last quarter, both profits and profit margins were up . The median sales price of second quarter flips was $232,402 and the median paid by the investor was $164,500
Fewer Homes Being Flipped, But Profits Are Up; Forbearances Keep Shrinking
Fewer Homes Being Flipped, But Profits Are Up; Forbearances Keep Shrinking

S&P 500 paces for worst September since 2011. What two traders see ahead

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Craig Johnson of Piper Sandler and Steve Chiavarone of Federated Hermes share their outlooks for the overall stock market as the presidential election draws near. With CNBC's Seema Mody.

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S&P 500 paces for worst September since 2011. What two traders see ahead
S&P 500 paces for worst September since 2011. What two traders see ahead

Consumer sentiment index comes in at 78.9 versus 74.5 estimated

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CNBC's Rick Santelli reports on strong consumer sentiment data.

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Consumer sentiment index comes in at 78.9 versus 74.5 estimated
Consumer sentiment index comes in at 78.9 versus 74.5 estimated

Here's what the latest data reveals about the economic impact of the pandemic

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USAFacts President Poppy MacDonald joins "Squawk Box" to discuss the latest data detailing to impact the pandemic has had on the United States.

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Here's what the latest data reveals about the economic impact of the pandemic
Here's what the latest data reveals about the economic impact of the pandemic

Coronavirus mortgage bailouts drop 0.7%, the smallest drop in four weeks

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CNBC's Diana Olick reports the latest numbers out of the coronavirus mortgage bailout program.

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Coronavirus mortgage bailouts drop 0.7%, the smallest drop in four weeks
Coronavirus mortgage bailouts drop 0.7%, the smallest drop in four weeks

Homes Across the Country Are Selling Fast [INFOGRAPHIC]

Homes Across the Country Are Selling Fast [INFOGRAPHIC] | Simplifying The Market

Homes Across the Country Are Selling Fast [INFOGRAPHIC] | Simplifying The Market

Some Highlights

  • Buyers are actively searching for and purchasing homes at a record-breaking pace. According to the latest report from the National Association of Realtors (NAR), in July, 68% of homes were on the market for less than a month.
  • With homes moving from listing day to pending sale in an average of just 22 days, it’s a great time to sell a house.
  • Let’s connect today so you can make your move while buyers are scooping homes up faster than they’re coming to market.

Homes Across the Country Are Selling Fast [INFOGRAPHIC]
Homes Across the Country Are Selling Fast [INFOGRAPHIC]