The most recent data release from the Bureau of Economic Analysis (BEA) showed that personal income surged in April to a seasonally adjusted annual rate (SAAR) of $20,674 billion. The 10.5% increase in personal income was largely the effects of Federal Pandemic Response Programs. Among the $360.5 billion increase in unemployment insurance, there were $132.0 billion in Pandemic Unemployment Compensation Payments, $24.5 billion in Pandemic Unemployment Assistance, and $0.7 billion in Pandemic Emergency Unemployment Compensation. However, compensation declined around 7.7% in April, after a 3.2% drop in March.

Real disposable income (income remaining after adjusting for taxes and inflation) was up 13.4% after a 1.8% loss in March. Personal consumption expenditures (PCE) plunged 13.6% in April after a decline of 6.9% in March. This unprecedented 13.6% decline was the steepest monthly decline since 1959, as businesses were shut down and households complied with the ‘stay-at-home’ orders.

In April, the rise in personal income and the drop in consumer spending pushed the personal savings rate to 33%. Personal savings increased to $6.15 billion (SAAR), almost triple the amount of savings in March. This record high savings rate reflects a slowdown in spending and economic growth during the COVID-19 pandemic.

Analysis of the American Community Survey (ACS) suggests that renters and young adults under the age of 34 are likely to face higher prolonged unemployment risks as a result of the coronavirus pandemic hitting the labor market. The labor market risks are also uneven across states, with state economies heavily reliant on leisure, entertainment, retail and personal services being most vulnerable.

While recent job losses due to the coronavirus shutdown are astounding and widespread across industries, the expectations of how fast the return to normalcy will take are quite different for the hardest hit sectors. The recent economic indicators suggest that construction might go through a relatively fast V-shaped rebound once the shutdown orders are lifted. The destiny of hard-hit manufacturing is less clear. The International Institute for Management Development (IMD) in Lausanne, Switzerland developed a list of potential winners and losers and identified manufacturing as an “in-between” sector.

Analysts tend to agree and note that entertainment (including accommodation and restaurant businesses), retail (except grocery and building material), personal services and transportation (air, train, water and sightseeing transportation) are among hardest hit sectors that are likely to experience lingering, elevated levels of unemployment. If this premise is correct, states with economies heavily dependent on leisure, entertainment, retail and personal services are particularly vulnerable.

Nearly one-quarter – 23.5% — of the U.S. labor force (including self-employed) were working in these high unemployment risk sectors in 2018. The share of households with at least one member working in the high unemployment risk industries is even higher, with the national average approaching 28%.While the labor force in most states has similar shares of the most vulnerable jobs, the workforce in Nevada, Florida and Hawaii faces much higher prolonged unemployment risks. As of 2018, a staggering 39% of Nevada’s labor force was in high unemployment risk industries, including over 23% in entertainment. Hawaii and Florida had 30% and 28% of their respective workforces in these industries, including 16% and 12% in entertainment.

At the other end of the spectrum are the District of Columbia and states like, North Dakota and Wisconsin with shares of workforce in high unemployment risk industries below the national average – 17%, 19%, and 20%, respectively. Similarly, Virginia, Nebraska, Vermont, Connecticut, Maryland, Massachusetts and Iowa have shares under 21%.

Renters are more exposed to unemployment risks. Thirty-one percent of all renter households have at least one member working in the most vulnerable sectors. Among homeowners, this share is 26%. Once again, Nevada and Hawaii recorded the highest shares of owners and renters exposed to high unemployment risks. In Nevada, 44% of renter households and 38% of homeowners had at least one household member working in a high unemployment risk industry. For Hawaii, these shares were slightly above 39% and 35%, respectively.
In addition to Nevada and Hawaii, the rental markets in Utah, Arizona, Florida and Colorado are more vulnerable to high unemployment risks with a share of renter households with at least one member at risk of prolonged unemployment at 35%. Populous California, known for lower homeownership rates, stands out for registering the highest number of high-unemployment risk renters — close to 2 million — or one out of three renter households.

Utah recorded the third highest concentration of homeowners with at least one member in the prolonged-unemployment risk industry – 31%. Alaska, Rhode Island, Montana, Delaware and Texas had 28% of homeowners at risk of prolonged unemployment.

While renter households are more vulnerable to prolonged unemployment risks, the majority of households with at least one member in high-unemployment risk industries (60%) are owners – simply because close to two-thirds of U.S. households are homeowners.

The ACS data analysis also suggests that young adults under the age of 35 are at a higher risk of prolonged unemployment. Forty-three percent of the youngest workers under the age of 25 and almost a quarter of 25- to 34-year-olds were in the high-unemployment risk sectors. Together, they accounted for almost half (49%) of all workers in the most vulnerable industries. Long-term job losses experienced by young adults will undoubtedly suppress their household formation rates that had just started to rise before the coronavirus pandemic.

The estimates generated in this analysis are based on the 2018 American Community Survey, the largest household survey in the US. The ACS estimates reflect a more complete composition of the labor force by including payroll workers covered by unemployment insurance as well as self-employed workers.

Following a considerable drop last month, pending home sales fell for a second straight month in April, as economic and social activities were significantly reduced.

The Pending Home Sales Index (PHSI), reported by the National Association of Realtors (NAR), is a forward-looking indicator based on signed contracts. The PHSI plunged 21.8% from 88.2 in March to 69.0 in April, the lowest level since NAR began tracking the transactions in January 2001. On a year-over-year basis, sales were 33.8% lower than a year ago.

All four regions saw a decline in month-over-month contract activity, as well as in growth in year-over-year pending home sales transactions. The PHSI in the Northeast suffered the most, with 48.2% down from last month and 52.6% down from last year. However, compared to last month, rates of decline are lower in the Midwest, West and South.

Despite the significant decline in April, increased mortgage applications in recent weeks showed that housing demand has picked up. As mortgage rates have remained record low, NAR expected that buying activity would resume after government safely and cautiously reopens the economy.

An elevated rental share of multifamily construction is holding typical apartment size below levels seen during the pre-Great Recession period.

According to first quarter 2020 data, the average per unit square footage of multifamily housing construction starts was 1,086, off from the post-recession high set at the start of 2015 (1,247 square feet). The median was 1,031 square feet for the first quarter of the year.

Because the quarterly data are volatile, it is worth examining the numbers on a one-year moving average basis. For the first quarter of 2020, the one-year moving average for multifamily size was 1,102 square feet, while the median was 1,068. The current moving-average of median size is just 1% higher than the post-recession low, while the trailing average is now at a post-recession low. Multifamily unit size may increase in the quarters ahead, as a market response to the coronavirus recession.

The market share of rental multifamily construction starts held steady at 94% during the first quarter of 2020. In contrast, the historical low share of 47% was set during the third quarter of 2005, during the condo building boom. An average share of 80% was registered during the 1980-2002 period. There were only 27,000 multifamily condo units that started construction over the last year.