By using this site, you agree to our Privacy Policy and our Terms of Use. Close
SvennoJ on 31 July 2020
Edit Thread
Bofferbrauer2 said:
Jumpin said:

If that's the case, then we're both right.

As another note, US GDP is down 32.9%. This is actually kind of shocking considering heavily locked down countries still only dropped 10%, how is the US doing so much worse even when they weren't nearly as locked down as other places?

The US economy is fueled by over 70% on consumption, a higher ratio than any other country. But any store closure makes consumption impossible for the duration. Also, the amount of people laid off or furloughed, not getting much money in anymore, heavily weights on the consumption rate. And then of course there's the lockdown in itself; can't spend much money if you're staying at home, can you?

The worst part is that it is likely to continue, with the US now firmly being in it's second wave. And knowing the power of executives over the US government, both state and federal, I'm pretty sure the lockdowns will end too early yet again and bring in yet another wave due to doing so.

Also, the incoming housing crisis will make it much worse yet again. The rents are put on hold, meaning you do not have to pay them yet - but debt for rent payments are still racking up and eviction notes and the like are just put on hold. Once that moratorium ends, there will be mass evictions in the US (up to 29 million households, 3 times what the 2008 housing crisis had) - and guess how much that will weight on the economy.

Banks are also providing variable mortage rates under 2% interest. Good short term, but as soon as things recover those mortgages will all go up, a lot... We're set up for a new housing bubble as well.

Some bears out there think that the coronavirus crisis could be the pin that ends up bursting Canada’s housing bubble. The frothy Vancouver and Toronto real estate markets are among the frothiest on the planet. With rapidly rising unemployment levels as a result of COVID-19-induced lockdowns, many Canadians may be at risk of defaulting on their mortgages.

Even before the coronavirus, many pundits warned that there was a housing bubble forming in various parts of the country. With growing fears that we could fall into a depression environment, it would be foolish (that’s a lower-case f) not to rule out a scenario that could see a tonne of mortgage payment deferrals turn into defaults.