LOS ANGELES—With civil unrest still prevalent across our country, business reopening efforts were foiled by violence and curfews. The overall jobless claims are still staggering, with nearly 2 million filed new claims while the May unemployment rate is 13.3%. Intentions with Beijing persist while Wall Street is making gains from its March lows. Some economists are declaring that the COVID-19 recession is over, but clearly the recovery is only beginning. Is the worst really behind us or has it yet to truly begin?

In April 2020, the CMBS Delinquency Rate registered at 2.29%, but now in May, the CMBS Delinquency Rate logged its largest increase since 2009 at 7.15% (a jump of 481 basis points over the April number). Almost 5% of that number is represented by loans only in the 30-day delinquent bucket. So optimistically speaking, we can hope that roughly 5% will recover in the next few months and only 2.15% will remain in severe distress. Realistically, the numbers could head higher in June considering that about 7.6% of loans by balance missed the May payment.

We've recently witnessed some great economic data relative to what we were expecting this week and, historically speaking, the delinquency rate has in fact followed the unemployment rate almost exactly, but how believable is this v-shaped recovery? The ADP jobs number and unemployment rate were below predictions (some economists were predicting as high as 8-10 million job losses and 19-20% unemployment), but that doesn't mean we're out of the woods yet. At 40 million unemployment claims over the last 11 weeks, that's a large amount of furloughed people that have to attempt recovering their former jobs or find new jobs. Stock futures are firing up with a tremendous rally over the past six weeks, but we have a long tail coming. Considering consumer spending from business and seniors, we are expecting considerable bumps in the road over the next 18 months.