{"id":1004495953,"date":"2020-12-03T18:39:06","date_gmt":"2020-12-04T02:39:06","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004495953"},"modified":"2025-02-27T22:19:32","modified_gmt":"2025-02-28T06:19:32","slug":"economists-view-rise-to-the-challenge","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/economists-view-rise-to-the-challenge\/","title":{"rendered":"Economist\u2019s View: Rise to the Challenge"},"content":{"rendered":"

Perhaps there\u2019s no more politically incorrect author to cite than Rudyard Kipling, the Anglo-Indian writer whose oeuvre includes \u201cThe Jungle Book\u201d and \u201cThe White Man\u2019s Burden.\u201d George Orwell, the author of the prescient novel \u201c1984,\u201d called Kipling a \u201cjingo imperialist.\u201d Yet in 2007, India made his birth home in Mumbai a museum\u2014a project still awaiting completion.<\/p>\n

READ THE DIGEST<\/a><\/p>\n

\"Image<\/a>

Image by marsjo via Pixabay.com<\/em><\/p><\/div>\n

Let controversy be what it may, Kipling\u2019s poem \u201cIf\u201d bears remembering, and even memorization, if that skill should ever return to our educational toolkit. In 1995, almost six decades after Kipling\u2019s death, \u201cIf\u201d was voted in a BBC poll to be the U.K.\u2019s favorite poem, a high honor given the rich tradition of English literature.<\/p>\n

Why consider a poem like \u201cIf\u201d as we transition from the Trump era to a Biden presidency, and the economy\u2019s shift in 2021 and beyond?<\/p>\n

What now?<\/strong><\/h2>\n

Start with the opening challenge: \u201cIf you can keep your head when all about you are losing theirs\u2026\u201d What more pertinent reminder to sober judgment could we have in our hyper-partisan era? Within 24 hours of the \u201ccall\u201d of the presidential election in Joe Biden\u2019s favor, battle lines were already being drawn and punditry set out on issues like stimulus, taxation, debt and infrastructure, all in the context of an escalation of the public health crisis of COVID-19 and its strains on U.S. health care.<\/p>\n

In all those issues, we are faced with \u201cif\u201d conditions. Economically, we should be clear-eyed about where we are now and where we need to head. Even after the third quarter\u2019s rebound, the U.S. economy is fragile and true recovery will be a long haul. Here are some numbers\u2014sobering numbers\u2014to consider.<\/p>\n

Long-haul work ahead<\/strong><\/h2>\n
\"Hugh<\/a>

Hugh Kelly. Image courtesy of IRR<\/em><\/p><\/div>\n

Compared with the final quarter of 2019, GDP is still $670 billion off the peak. Even anticipating some stimulus plan during the fourth quarter of 2020, a plan on which negotiations are still far apart, the impact will come with a lag that delays traction into 2021. If no deal is struck, I see the result as being a \u201cW-shaped\u201d or \u201cdouble-dip\u201d recession.<\/p>\n

But even with a late 2020 deal in Congress and approval by the outgoing administration, we need to consider the magnitude of the task ahead.<\/p>\n

The best three-year average real GDP gain in the past decade was $115 billion per quarter. The worst three-year average was $70 billion per quarter. With this range as a guide, a return to the prior real GDP peak would be in the first quarter of 2022 at the earliest, the second quarter of 2023 at the latest. Note there is an optimistic assumption that the past decade sets the norm. But the trajectory of potential GDP was already flatter for this coming decade in pre-COVID-19 projections. Business planning in real estate should prudently expect a recovery in final demand to be slow and unevenly distributed.<\/p>\n

Lagging employment recovery <\/strong><\/h2>\n

Moreover, we should anticipate a significantly slower jobs recovery. February 2020 set the pre-pandemic peak at 152.5 million jobs. Even with the bounce-back through October, the U.S. is still down 10.1 million jobs. Again, our best three-year average monthly job gain between 2010-2019 was 226,000 and the worst three-year average was 147,000 jobs. Within such a range, the jobs recovery to prior peak is September 2024 at best and October 2026 at worst.<\/p>\n

The trend is likely to skew toward the later date due to permanent job losses owing to COVID-19, a figure now estimated to be 3.8 million. The most severely affected industries are airlines, hotels, restaurants and other leisure activities. Of course, each of these is linked to dozens of supporting sectors.<\/p>\n

Not the least of the knock-on effects is in state and local government employment, which will be hammered by shortfalls in tax revenue in the economic slowdown already experienced. There are approximately 16 million state and local government workers. Since February 2020, there has already been a loss of about 365,000 state and local jobs. Jobs at future risk include many essential workers in public safety, education and the administration of vital services including transportation and health.<\/p>\n

The real estate community should plan for \u201cfull\u201d employment recovery no earlier than mid-decade. Consequently, the level of final demand for commercial property utilization should be considered attenuated for several years.<\/p>\n

A timely reminder<\/strong><\/h2>\n

\u201cIf\u201d reminds us of acting under conditions of uncertainty, while maintaining a core of humble open-mindedness. But the poem also calls for us to brace with inner strength, a fortitude that will be key to our economic revival:<\/p>\n

\u201cIf you can bear to \u2026 watch the things you gave your life to, broken,<\/em><\/p>\n

And stoop and build \u2019em up with worn-out tools;<\/em><\/p>\n

If you can force your heart and nerve and sinew<\/em><\/p>\n

To serve your turn long after they are gone,   <\/em><\/p>\n

And so hold on\u2026<\/em><\/p>\n

Yours is the Earth and everything that\u2019s in it.\u201d<\/em><\/p>\n

That spirit is almost Churchillian or Rooseveltian. That\u2014and not mere technocratic tweaking\u2014is what the economy and the real estate industry will need in order to sustain the long-haul work of emerging from the crisis and its serious economic ramifications. We will not succeed by underestimating the challenge ahead but rising to it.<\/p>\n

Hugh F. Kelly is director of graduate programs & chair of the executive advisory council curriculum committee at the Fordham University Real Estate Institute, and chair of the institute\u2019s executive advisory council curriculum committee. He is a principal at Hugh F. Kelly Real Estate Economics, a consultancy. Kelly is the author, most recently, of “<\/em>2<\/em><\/strong>4-Hour Cities: Real Investment Performance, Not Just Promises”<\/em> (Routledge\/Taylor & Francis).<\/em><\/p>\n

Read the December 2020 issue of CPE.<\/em><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In highly uncertain conditions, maintaining a \u201ccore of humble open-mindedness\u201d is the way to go, according to economist Hugh Kelly.<\/p>\n","protected":false},"author":1082,"featured_media":1004495992,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1521,37752],"tags":[],"class_list":["post-1004495953","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-digital","category-research-center-economy-ecommerce"],"acf":[],"yoast_head":"\nEconomist\u2019s View: Rise to the Challenge - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/economists-view-rise-to-the-challenge\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Economist\u2019s View: Rise to the Challenge\" \/>\n<meta property=\"og:description\" content=\"In highly uncertain conditions, maintaining a \u201ccore of humble open-mindedness\u201d is the way to go, according to economist Hugh Kelly.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/economists-view-rise-to-the-challenge\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2020-12-04T02:39:06+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-02-28T06:19:32+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2020\/11\/Economist-December-chess-3960184_1920.-Image-by-marsjo-via-Pixabay.com_.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"900\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Hugh F. 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