May 14, 2020
In the second of what has become a series of weekly webcasts presented by Walker & Dunlop and hosted by CEO Willy Walker, economist Peter Linneman warned on March 25 that 50 million Americans could lose their jobs in a matter of months if the COVID-19 shutdown went on that long.
Seven weeks later, with an estimated 40 million to 45 million people now out of work, the Linneman Associates founder said on this week’s webcast, “What we talked about on March 25 was basically what happened.”
For the May 13 webcast, Linneman agreed to fill in for the originally scheduled guest, Colorado Gov. Jared Polis, who was called to a meeting at the White House. He took the opportunity to provide his assessment of what has happened since late March with regard to controlling the pandemic and mitigating the economic fallout.
“The mission creep has been extraordinary,” Linneman said. Government actions to help ensure that testing and hospital capacity were adequate evolved into restrictions intended to limit community spread by limiting people’s movement outside of their homes.
He compared this “mission creep” to President John F. Kennedy’s sending a handful of military advisors to South Vietnam—a complement which had grown to some 100,000 U.S. troops a few years later. In both instances, Linneman said, the original mission was obscured.
Linneman divided the shutdown of much of the national economy into “don’t want to” and “can’t do” effects. The former is consumers deciding that they don’t feel comfortable with, say, travel or attending basketball games amid a heightened risk of becoming infected, while the latter is people not shopping or not going to the office because of government-issued stay-at-home orders.
“The ‘can’t do’ world is well-intended, but it’s crushing,” he said. He added that recovery will begin to occur as “can’t do” hands decision-making back to “don’t want to.”
Walker and Linneman took a sector-by-sector dive into where investment opportunities are likely to be found and how the recovery will play out. However, Linneman observed, “It’s hard to imagine any sector doing well with 25% unemployment.”
On-demand replays of the May 13 webcast are available by clicking here.
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