Make no mistake. When 4.8 million Americans go back to work in one month it’s good news. Today’s Employment Situation Summary from the Census Bureau showed that about 30% of the workers laid off during the March-April COVID-19 mitigation have been re-hired. Unemployment fell to 11.1%. That report comes on the heels of private payroll report for June from processor ADP, which showed 2.4 million jobs being recovered in the private sector last month. The Census Bureau rolling chart is one that is unlike any other in my lifetime.

So, what’s the bad news? First, the report on first-time unemployment claims for the week of June 20 was released this morning and it showed that claims increased last week. Another 1.428 million people filed for unemployment and the number of people continuing to claim unemployment comp jumped to 19.2 million. Last week marked 15 consecutive weeks with first-time claims in excess of one million. The ADP data was essentially a mirror image of its adjusted May numbers, meaning the growth merely backfilled the additional reductions in May.

Let’s re-emphasize: adding almost five million jobs is good for the economy, especially when the hiring coincides with an increase in the number of people in the workforce, which is what happened in June. What has economists concerned is the fact that the June hiring was mostly unaffected by the rapidly rising number of new infections in the U.S. The most acutely affected areas in the South and Southwest are now seeing pullbacks on business openings and on customers willing to risk “normal” activities. Don’t be persuaded by the images in the media of crowded bars and parties. As the hospitalizations are increasing, citizens in the areas affected are reducing their exposure. That means there will be pressures to reduce costs for businesses in those areas soon. And, in the final analysis, the economy doesn’t really re-start until the schools do. That prospect is looking grimmer now.

The problem continues to be a public health problem first and an economic problem second. Leaders cannot re-start the economy by imposing their will. This isn’t a partisan phenomenon. Yes, the first states to see new surges were red states with governors who have had to walk back their bluster. California is also seeing record spikes, and they were the first state to shelter at home, and California’s Gov. Newsome is a deep blue Democrat. You only need to look at Allegheny County to see that taking your eye off the ball for a couple of weekends was enough to fire community spread again.

There is a potential upside to this new spike in infections. It may drive people to finally act as though a highly contagious virus is sweeping the U.S. That might push enough people to capitulate to preventative measures, like wearing masks outside their homes, to impede the spread. In stock market terms, capitulation is when the last of the bulls finally sell off. Every stock market crash eventually has a capitulation point, after which recovery begins. Let’s hope the June flare-up, which will set the economy back for a spell, is that capitulation point for COVID-19. Until there is a vaccine, what stops the virus in its tracks is not having hosts. Following the simplest of preventative measures deprives COVID-19 of its oxygen to spread.

It’s giong to be a tough time to own a bar, or a theater, or a football team for that matter, until a vaccine is delivered. But stamping out the spread gets us a long way back to economic growth.

On the bidding front, Canonsburg-Houston Joint Authority put the $28 million 2nd phase of its wastewater treatment plant modernization out to bid, due Aug. 17 according to the Builders Exchange. Massaro CM Services is managing the bidding of the $7 million PSU West Campus Chilled Water Plant in State College. TBI Contracting was the low bidder on the $2.7 million spec Alta Vista Lot 10A industrial building in Washington County. Carl Walker Construction is about to start work on the 376-car parking garage at the Vision on Fifteenth office building in the Strip District.

It’s going to be Labor Day until we have a (somewhat) reliable read on just how much the economy is re-opening. There has to be back-to-school before there is back-to-work. Colleges have to see what kind of decline in enrollment the pandemic has created. This will vary. The significant chunk of businesses that make their livelihood during the summers will know how that went. What all of this will depend upon is the consumer returning from sheltering at home to spending. There’s some good new there. The savings rate for U.S. consumers is at an all-time high. The $1,200/person checks and shutdown of most businesses kept a lot of cash in the pockets of consumers. Readings on consumer sentiment suggests that people are itching to use that dry powder. That would be good for business.

There are a variety of good news reports since the late May/early June opening of most states. The housing market is probably the best news. Housing starts bounced back 5.4% in May and permits were up 14.4%, a good sign for June and July. The NAHB Market Index jumped to 58 in June. Consumer spending jumped 18% in May, basically reversing a similar decline in April. Thursday morning’s report on new unemployment claims showed 767,000 fewer people on continuing unemployment, dropping the number to 19.5 million.

That unemployment claims report also had bad news, of which there is still plenty. During the week ending June 13, an additional 1.48 million people filed for unemployment for the first time. That’s down slightly from the week before and a continuation of an 8-week trend since the peak of job losses in April, but 1.48 million new claims is about 7 times the filings in February. The more concerning news is the increasing number of hospitalizations and infections across 26 states, including several of the largest hot-weather states. Sadly, this has become a political issue as much as a public health issue, but the long and short of the problem is that COVID-19 cases are rising sharply instead of falling as hoped. Should this surge go on, there will be economic damage in the South, Southwest, and West. The big increases are in Florida, Texas, Arizona, Georgia, California, Oregon, and the Carolinas. Those are red, blue, and purple states. COVID-19 has proven to be color blind. If conditions worsen, even reluctant elected officials will have to consider mitigation. Arizona stopped elective surgery again, meaning hospitals will face steep revenue declines. Even without mitigation or shelter at home, private citizens and businesses have shown they will pull back. Disney delayed opening its California parks until after July 4, for example. The places experiencing a spike are also among the most popular travel destinations or business hubs in the U.S., which means there will be spreading into other regions from these hot spots. We won’t have to wait for Labor Day to see how this plays out. By mid-July the efforts to tamp down the flare ups will be measurable.

Regional construction bidding slowed considerably in June. Bidding is picking up a bit into July, which is typically a slower month for bidding activity. The $55 million Evans City Elementary School bids July 14. ALCOSAN’s next project, a $22 million upgrade of its Return Activate Sludge facilities is due July 8. PJ Dick is starting work on the $15 million Ihmsen Hall at Mt. Aloysius College. Rycon Construction is doing a new $2.2 million branch for Chase Bank in Bridgeville. A report on the region’s largest construction project: about 25% of the workforce has returned to work at Shell’s Monaca project. The virus safety measures are expected to reduce the peak labor force from 6,000 pre-pandemic to 4,000, which will add six months or so to the original completion schedule.

Based upon activity through May, our estimate for construction starts in metro Pittsburgh for the first half of 2020 is $1.71 billion. Given the overall economic picture, there is going to be less activity during the last six months of the year. Activity for 2020 will not reach $4 billion, and could be off as much as 30% from the $4.8 billion forecast at the beginning of 2020. Activity in the technology sector is encouraging, especially to the degree that the research at Pitt and CMU are still supporting dynamic, high-demand technology solutions to problems like the coronavirus and cybersecurity. A medical solution by early 2021 could unleash enough pent-up demand to recoup the construction that wasn’t executed in 2020. Pittsburgh’s construction industry, in the meantime, is left waiting for such a solution.

This morning’s April jobs report was both stunning and completely expected. The headline – that 20.5 million fewer persons were employed in April – is unprecedented in documented U.S. history. At the same time, the Bureau of Labor Statistics’ report was in line with the trend from the weekly unemployment claims filed during the past eight weeks. The unemployment rate of 14.7% was slightly lower than what was forecasted by economists.

The data confirms that the U.S. economy has a mountain to climb before recovering. Anyone who gives you a forecast of how that recovery will go is a fool. There is no playbook for this kind of recession. Virtually none of the lessons from 9/11, the financial crisis, or the Great Depression for that matter, can be applied directly to the current situation. Government action has been swift but more time is required to judge if the quick action was an effective backstop or a Band-Aid on a bullet wound. There are some big trends beginning to appear, however. None can provide certainty about the near-term future but any clarity is welcome.

1) Government action will not restart the economy. Reopening business (more accurately, removing shelter at home restrictions) is different from restarting the economy. Evidence from China, Italy, Texas, Denmark, and Sweden points to a consumer who won’t return to consuming just because stores are open. Sweden has been held up as a model of remaining “normal” while the pandemic raged. Swedish consumers did not spend normally, reducing personal consumption by roughly 80% since March. It’s going to take a medical solution to make consumers comfortable that there is little or no risk in returning to normal activity.

2) China’s role in the world will change. As the U.S. relinquishes its leadership role in many global organizations, China has stepped in to increase its investment. Chinese companies, backed by its government, are poised to swoop in to buy struggling European auto makers and international airlines at pennies on the dollar. At the same time, China’s role in the global supply chain has made thousands of manufacturers vulnerable. Re-shoring the supply chain will happen. If it happens to a large degree, much of China’s manufacturing and its burgeoning middle class will be decimated. Negative sentiment about China’s lack of information and disinformation about the COVID-19 outbreak in Wuhan is fueling a backlash that will impact its trade. Whatever trajectory China was on in the global scene will be altered going forward.

3) The pandemic will accelerate the trend that was rewarding scale. Bigger companies will get bigger. There will be an acceleration of mergers and acquisitions once financing becomes more certain. Some big corporations will fail and their customers will make big competitors bigger.

For the Pittsburgh economy, some of these emerging macroeconomic trends could have some pretty specific impacts. As a center of medical research, Pittsburgh could get a boost if a treatment or vaccine originates here or can be replicated here. Will the disruption of China’s global role dim the flow of students and researchers to CMU and Pitt? Will the pandemic limit the number of foreign students overall to the economic drivers of our region. Does a tech giant buy struggling auto companies or consumer appliance makers and alter the arc of autonomous vehicle or artificial intelligence research in Pittsburgh?

On March 30 I posted that you shouldn’t trust articles that were heavy on “could,” “might,” or “may.” The word “could” only appears twice in this post but I’d still caution you from putting much stock in predictions at this point, especially those I make.

Construction returned to work this week in PA and the reports are that it went fairly smoothly. The Shell cracker project is a notable exception to the restart of work, although more workers are expected on site next week. There is no word from Shell or Great Arrow as to when a return for the 5,000-plus workers will occur.

In construction news, Arco Murray is underway on the $20 million PurePenn expansion at RIDC McKeesport. Momentum Inc. has started work on the new $2.8 million Armco Federal Credit Union Hub Branch in Mars. Haemonetics selected Al. Neyer to build-out its new $24 million lab in Findlay Township. AIMS Construction was awarded the $1.9 million UPMC St. Margaret’s Hospital roof and air handler replacement. MBM Contracting is working on $4 million-plus renovations at Jefferson Medical Arts Building and South Hills Medical Building in Jefferson Hills.

Construction resumes on Friday. There will be a number of conditions placed upon construction activities that will be restrictive. Over the next couple of months contractors and owners will test the limits of their collaborative natures as workers incorporate cleaning, distancing, and additional safety clothing into their daily productivity. There will be challenges to the productivity assumptions of all parties to a construction project. Questions remain unanswered about how willing the skilled worker will be to return to work, and how willing the construction owner is going to be to reopen its job site with so many unknown factors.

One of the unknowns about restarting construction is how much demand will return for construction services. Here in Pittsburgh, there were a handful of mega-projects in some form of construction or development that will create immediate demand for many workers, assuming the work resumes. It appears the Shell Franklin project will continue to its finish in 2021. Likewise, the $1.1 billion airport Terminal Modernization Program is expected to resume its early contract bidding this spring. Less certain are the $1.2 billion US Steel Mon Valley Works modernization, the $8 billion PTT cracker, and the timing of the UPMC Transplant and Heart Hospital at Presbyterian Hospital in Oakland. More uncertain, of course, is the demand from the bread-and-butter construction economy.

As states reopen for business gradually, the U.S. economy will begin shaking off the effects of around six weeks of shutdown. One effect of the timing of the sheltering at home is the lack of data measuring its impact. With more than 26 million first-time claims for unemployment filed during the period, it’s not hard to assume that consumers will have spent much less than normal. Consumer spending declines varied depending upon the type of expense. Clothing sales fell 50%. Hotel and airline receipts plummeted by more than 90%. Grocery sales jumped by 15%. All of these comparisons are March-to-February. We can be certain that a full month of sheltering in April will depress numbers again in April. Manufacturing also declined. Capacity utilization dropped over 7 points to 72.7% currently. Six weeks into the recession conditions, some data is emerging to give a view to the recovery that will follow.

Tuesday morning, CBRE’s senior economic advisor, Spencer Levy, addressed an audience of Pittsburgh real estate executives about the commercial real estate market recovery. In the presentation, called “Reassessing Pittsburgh’s Real Estate and Economic Outlook,” Levy expressed optimism about the macro economy and Pittsburgh’s economy. Levy pointed to the recovery in Hong Kong and China (to an extent) as indicators that demand for goods and services will return. His belief in a “V-shaped” recovery may be overly optimistic for the U.S. economy, but he made a case for Pittsburgh’s resilience to the downturn. Levy pointed out that cities with strong technology sectors, like San Francisco, Boston and Austin, saw stronger economic performance after the financial crisis and the 9/11 Dotcom bubble recessions. He expressed caution about the depressed oil/gas sector and the potential decline in international students, which have helped drive the strong universities in Pittsburgh.

More globally, Levy predicted that the “next 45 days are the most important for commercial real estate in U.S. history.” The slowdown in leasing and acquisitions reflects the great uncertainty about future occupancy and rents. Levy noted that CBRE-managed properties had fared better than expected thus far. Its multi-family and office rent collections were running at 90% of normal, while industrial properties were at 70%. Retail and hotels rents were between 20% and 40%. In his opinion, the next six weeks would help U.S. commercial real estate find a bottom and pricing certainty. From that point Levy predicted that multi-family and industrial properties would recover in 2021; office buildings would recover in 2022; and retail and hotels would lag into a third year of recovery.

Another global indicator of future construction, the AIA’s Architectural Billings Index (ABI), reflected the sudden shock to the economy that came in mid-March, with the billings index falling further than at any time in its history to 33.3%. The ABI is a binary index that reflects whether a firm’s billings increased or decreased from the previous month. The reading in March indicates that 2/3 of all firms saw declines in billings. That matches the responses at the depths of the Great Recession in Jan-Feb 2009.

Some of the major commercial real estate projects in Pittsburgh are continuing to advance, perhaps validating Levy’s point about the tech and biomedical sectors. Wexford Science & Technology took proposals from Turner and Mascaro on its 180,000 square foot research building on Forbes Avenue. A few blocks west, PJ Dick is bidding packages on Walnut Capital’s $100 million Innovation Research Tower. Spear Street Capital took proposals on the $50 million conversion of the former Sears Outlet at 51st Street. Aurora took proposals on tenant improvements for 140,000 square feet at 1600 Smallman Street.

Clarification: The April 23 post incorrectly listed AIMS Construction as the low bidder on a $4.5 million renovation to Pitt’s Cathedral of Learning ground floor, which was put on hold. AIMS was low on one alternative for the $1.5 million Architectural Film Studies Lab at the Cathedral of Learning. Dick Building Co. was the low bidder on the other alternative proposal.

The construction industry in PA received its second re-start news in the past week last night when Gov. Wolf announced his plan for reopening the PA economy. In Wednesday evening’s announcement was the news that construction could begin again on a limited basis on May 1. The announcement from last Thursday put the re-start of construction at May 8. Read the governor’s 3-step process to reopening.

Wolf’s most recent announcement was lacking updated instructions on what “limited” meant. If that assumes the same standards as were indicated last Friday, it means contractors can return with protective gear and follow the CDC’s guidelines for safe work. That would include washing/sanitizing tools and equipment, maintaining six-foot distancing between workers, heightened job site cleaning, and restrictions on workers congregating together. There were limits on the number of workers discussed after the April 16 announcement, which will need to be confirmed prior to returning to work. Those limits allowed four workers for projects up to 2,000 square feet, with one worker per 500 square feet after that. These limits could present a problem for small complicated projects like hospitals or labs, where multiple trades need to work in small spaces like MRI units or operating rooms. For medium-to-large spaces, however, the limits are manageable. For example, a 30,000 square foot project would accommodate 60 workers at a time.

With the industry on the verge of re-opening, some construction news is in order. This morning, Burns & Scalo Real Estate announced it was developing Diamond Ridge, a 500,000 square foot, $130 million office complex of three buildings in Moon Township. The firm does its own construction and work is expected to start one the first building at the end of the year. Volpatt Construction was awarded the $3 million Langley Hall renovation at Pitt. DiMarco Construction was successful on the $2.75 million Butler County Community College South Campus maintenance building. DiMarco was also the low general on the $13 million South Hills Village PAT Station and garage renovation. MBM Contracting is doing the $3 million amenity space at One Gateway Center. United Contractors was awarded the general package on the $6.6 million Moniteau School District renovations in Butler County. Rycon Construction will be converting two buildings into Chase Bank branches in Oakland and on McKnight Road in Ross Township.

This morning’s announcement of first-time unemployment claims reported 4.4 million new unemployed in the week ending April 21. That brings the total of the four weeks since the national emergency was declared to more than 26 million claims. Beginning May 1, we will begin to get some hard economic data on activity since the shutdown of business. Expect that construction spending totals will not be as bad a number as many other indicators, since only three states stopped construction. The drop in demand for construction should reduce the total to near $1 trillion. That’s about a $300 billion decline since February.

We are apparently expected to name our economic events. The title above is one I’m seeing increasingly as the reference to the recession we are now experiencing. This past week marked the first month of sheltering at home in PA, and for most of the U.S. Today, the Labor Department reported that 5.2 million more Americans filed for unemployment last week. That brings the total for the four weeks to more than 22 million people laid off. It’s likely that number will be added to significantly next week but many economists believe that the terrible total from the first four weeks will have brought the U.S. economy very close to the bottom of the cycle. Allowing for the few companies that were hiring during April, the next jobs report on May 1 should show unemployment above 17%.

It’s way too soon to have a clear idea of what the recovery from this looks like. First, we’d have to have a clear end to the pandemic. In the U.S., there are insufficient means to test and trace those who are infected, meaning that the methods used to return to normal in other countries that have beaten back COVID-19 can’t be applied here yet. Assuming that business does begin to re-boot sometime in May, here are a couple of thoughts about what to expect from various economists and researchers:

1: Reopening the economy in the manner suggested by the advisors to the White House would lead to about one-third of the unemployed to rejoin the workforce by July. That brings unemployment back to 13% or so.
2: The abrupt nature of the disruption probably dipped GDP into negative territory for the first quarter. The deep decline since late March should compress most of the technical recession into the second quarter. That dip will be catastrophic, likely above 20%.
3: GDP growth should return in the third quarter. Some very smart economists predict that GDP will bounce back 7-10% this summer. I’m not sure I buy that but I understand upon what those experts base their forecast.
4: Without adequate testing and tracing, COVID-19 infections will flare up in the fall (maybe even sooner in places that have ignored the advice to practice social distancing). Controlling those flare-ups of community spread will allow the recovery to continue.
5: “Normal” will not return again until there is a widely available, affordable, treatment for COVID-19. That can either be a therapy or a vaccine.

The discussions/shouting match about reopening the economy is political, not economic. Neither the president, nor Congress, nor governor, nor mayor can get people back into restaurants, shopping centers, and offices if they don’t trust the environment will be safe for them. It’s why the success of finding a therapy or vaccine is not just a medical necessity but also an economic necessity. If we can take an antibiotic, or gargle with Listerine, or get a shot, and be confident that it won’t kill us, we’ll begin to return to our old habits of consumption. That’s when the economy will grow fast enough to bring everyone back to work.

One surprising finding from talking to local contractors this past week: bidding didn’t really slow down over the past month. Most of the public bidding did; however, owners as varied as PNC, Hitchiker Brewing, Chase Bank, Walnut Capital, Dancing Gnome, and Pitt have taken bids and awarded contracts while we have been sheltering. These haven’t turned into construction starts yet but it suggests that some number of the owners are ready to renew their business when it is safe to do so.

In construction news, the $40 million CCAC Workforce Development Center is out to bid. Likewise, bids are being taken for the $20 million Arnold Palmer Airport Runway Expansion and the $15 million Montgomery Dam repairs near Monaca. Pittsburgh’s URA approved financing for several projects this week. Mistick Construction will be renovating 327 North Negley into apartments, a $10.7 million project. URA approved funding for the $27 million Flats on Forward in Squirrel Hill, which PJ Dick will build. Buccini/Pollin and the Penguins unveiled its plans to the URA for purchasing the site for the $200 million FNB Tower in the Lower Hill. That project will be built by a venture involving PJ Dick, Mascaro and Massaro.

On March 20 I posted about how difficult the coming weeks were going to be. As expected, the past week brought much worse news than the previous week.

News about the spread of COVID-19 has followed the same pattern as the news that has come from the rest of the world. As states have responded to the outbreak with shelter-in-place orders, the economy has slowed. The huge jump in first-time unemployment claims filed – some 3.28 million new claims – shocked the public but was also not a surprise to economists tracking the pandemic.

The next few week’s news will be bad too. That’s how the fear stage of a crisis works out. It is likely that the news won’t improve much for a while. That doesn’t mean we won’t work through the fear stage. We’ll accept the gravity of the situation, or get used to the bad news, and then work our way through the crisis. Business owners I know started doing that very thing this week and it was a tough week for that reason. Working through this means layoffs and pay cuts. Small business owners hate taking those steps but they are the first steps in recovering. You have to survive to recover. And there will also be good news too. Last week Congress passed a package of measures that will help with some of the economic damage from the outbreak. Federal guidance on isolation were extended and showed the government was taking the outbreak seriously as a public health threat. Even the stock market showed signs that the selloff may have stopped.

One thing that helps with the fear stage is being informed. That has its own set of challenges. You have to work hard at deciphering information from opinion but here’s a tip: avoid any article that has the words “could,” “might,” or “may” in the title. These are attempts at predicting how this crisis will play out. They are most certainly going to be wrong. The forecasts will be both too gloomy and too optimistic, but almost certainly wrong. It’s not that the articles won’t be well-researched or the forecasts unfounded; it’s that the most important variables are so far from being understood that you can’t reliably predict an outcome.

As an example, some very smart people earlier this week predicted that unemployment “could” reach 30 percent as a result of the shutdown. That was the Federal Reserve Bank of St. Louis. That’s 47 million people, or six times the number of people thrown out of work in 2008-2009. Several industry categories would have to go to zero employment for that to come true. More importantly, that kind of forecast leaned on variables about infectious rates and quarantining that aren’t even known in countries that faced the virus a month before the U.S.

Why does this matter? In the fear stage, our minds gravitate towards the negative emotions. We envision the worst that could happen as our likeliest future. Christy Uffelman from Align Leadership shared this Harvard Business Review article on the emotions of fear last week. It’s OK for leaders to embrace the grief that this kind of crisis brings; it’s not OK for leaders to embrace opinions and feelings as facts. Better we should stick with what we know, rather than search for what experts think might happen. Reflecting again on the financial crisis, many of the experts who were forecasting the end of the world in September 2008 were telling us that the panic was overblown in July 2008.

The course of events over the next few months is unclear. Uncertainty helps feed fear too. But some things that are uncertain will have positive outcomes too. There will be resources thrown at developing a vaccine as quickly as possible. It won’t take as long as we fear. Prior to World War II, it took three years to build an Essex class air craft carrier. By 1943, shipbuilders were launching one every 3 ½ months.

We simply don’t know what we don’t know about this pandemic. Stick with resources that inform you, rather than those trying to tell you what will happen or how to feel. Here are a couple of suggestions:

Allegheny County established a rumor control website for public health concerns.

Newmark Knight Frank issued a clear-eyed and objective report on how the pandemic is impacting commercial real estate and construction.

U.S. Senate Committee on Small Business and Entrepreneurship posted a useful guide to the benefits in the $2 trillion CARES Act for businesses.

There is construction news, even in a shutdown. First, the shutdown of construction may be short-lived. Speaker of the PA House, Mike Turzai, is introducing HB2400 next week to allow all construction projects to move forward with mitigation efforts in place. Industry associations have been working to draft mitigation plans this week to make job sites safe for workers. It is not known if Gov. Wolf will support such a bill. The General Contractors Association of PA – working closely with the MBA – developed a COVDID-19 exposure mitigation plan that will inform PA policy.

In project news, Mascaro Construction is coming out of the ground on the $12 million Steelers Pro Shop addition to Heinz Field. Carl Walker Construction has started work on the $11 million renovation of the UPMC parking garage at 3500 Terrace Street. Omega Building Co. is underway on the $7.9 million kitchen and restroom renovations at the Cork Factory. M*Modal is taking 53,000 square feet in the $20 million expansion/renovation of 7514 Penn Avenue that Franjo Construction is doing. Lone Pine Construction was awarded the Westmoreland County Municipal Authority’s $5.5 million office and garage in New Stanton.

Right off the bat, let me offer a disclaimer about the Fed’s rate cut. It’s going to help certain (very limited) parts of the US economy but will do nothing to help with whatever economic headaches result from the coronavirus. You can read more of this rant in the Publisher’s Note of the March/April BreakingGround in a couple weeks. The economy doesn’t need stimulus. What will be needed is a safety net for those who get thrown out of work. That will probably be cheaper for us taxpayers and way more effective than measures that will mainly please big donors to political parties. The oil and gas industry is getting clobbered further because the Russians and Saudis have started an oil price war. If the coronavirus was cured tomorrow that wouldn’t change. Likewise, giving people payroll tax relief helps those who are on someone’s payroll, not those who are laid off. That’s the disclaimer. I didn’t say it would be short.

Cutting rates is bad overall for banking because it reduces bank interest income from lending. Rate cuts are good for banks and lenders, however, when the cuts stimulate mortgage loans. Boy, has last week’s cut worked in that regard. The Mortgage Bankers Association reported this morning that there was a 79% jump in refinancing activity since last week. SINCE. LAST. WEEK. Refinancing activity is up 479% compared to last year. Refinancing is a zero sum game, which in the long run reduces the interest income for lenders overall. But, in the meantime, a 479% increase in refinancing will mean a significant increase in fees associated with the new loans. And, for the consumer, the refinancing means a big improvement in the household balance sheet. Cost of home ownership is lower. There’s more discretionary income. Mortgage indebtedness is cut to 15 years or less for millions.

The Mortgage Bankers also reported that there had been a 6% increase in home purchase mortgage applications, which was a 12% increase year-over-year. That pales in comparison to refinancing applications but there isn’t a Realtor in America who wouldn’t take a 12% jump in home sales. Likely that increase would be greater if there was a normal inventory of homes for sale.

On to Pittsburgh construction contracts. The Builder’s Exchange is reporting that Mistick Construction is taking bids on its $13 million 49-unit Clairton Inn mixed-use project. PBX also reported that Watson Institute is taking bids from A. Martini & Co., PJ Dick and TEDCO. Turner Construction was awarded the $12 million Price Waterhouse TI at One Oxford Centre. PJ Dick will be the contractor for the $10 million conversion of the Roundhouse at Hazelwood Green. Volpatt Construction was awarded the $4 million Carnegie Library Downtown Branch renovation. Stevens and Chapman Corp are building the new 250,000 sq. ft. plant for AmeriPrecision Metals in Canonsburg. Landau is the CM for Grove City College’s $8 million library renovation. And in non-Pittsburgh construction news, Mascaro Construction is the CM for the $90 million Carolina Panthers headquarters and training center just south of Charlotte in Rock Hill, SC.