The Latest on the Job Market

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses the latest on the job market.

  • Because of the government shutdown, there is no jobs report as had been originally scheduled. However, one can gauge the overall job market movement from other data.
  • ADP, a private sector company which processes paychecks for many private companies, reported 166,000 net new job creations in September. Over the past year 2.1 million net new jobs have been created. Though there are deviations in monthly job additions between the official government data series and ADP, the data closely align in measurements over the 12 month period. Therefore, one can reasonably assume that 1.9 to 2.3 million net new jobs were created had the official data been released today.
  • Job additions naturally help fill the pipeline of potential homebuyers and increase net absorption of commercial real estate properties. From the depths of the recession in 2010, essentially 7 million net new jobs have been added to the economy in both measurements.
  • Once the official data is eventually released after the government shutdown, the data to watch is ‘employment rate’. The oft-mentioned ‘unemployment rate’ has been falling and making steady progress, from a near 10 percent jobless rate to 7.3 percent in August (with no info on September). But the ‘employment rate’ has not improved, stuck at 58 percent, compared to a 63 percent employment rate prior to the recession. The interpretation is that jobs are being created, but not fast enough to quickly absorb newly minted college graduates who are seeking meaningful work.
  • Many fine products were created during economic hard times through ingenious entrepreneurs. Think Mickey Mouse and Disney, Microsoft, and the Apple Computer. The magnificent things in the beautiful city of Florence, Italy were mostly created right after the very depressing situation in the aftermath of the Great Plague. Let’s hope the jobless do not lose hope and rather are able to create new fine things.

Lawrence Yun, PhD., Chief Economist and Senior Vice President

Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.

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