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 employment.
- The economy added 175,000 net new jobs in February, thereby bringing total in the past 12 months to 2.2 million. Job creations provide the foundation for a new set of homebuyers and for increased demand for commercial real estate.
- The unemployment rate moved up one notch to 6.7 percent. At its worst a few years ago, the unemployment rate was 10 percent. Though this is progress, there is a bit of murkiness in the unemployment figure because of those who dropped out of the labor force and are not counted. A cleaner measure is the employment rate: the proportion of the working age population with jobs. The employment rate has remained stuck at 58.8 percent, about the same level for the past five consecutive years. Before the recession hit, the employment rate had been about 63 percent. In short, there has been an improvement in the unemployment rate, but absolutely no improvement in the employment rate.
- Construction related jobs have increased by 152,000 in the past year. However, the degree of recovery is very weak considering the massive job cuts that occurred in this sector. Moreover, there appears to be sizable pent-up hiring demand in construction since home building activity has increased by 50 percent from the low of few years ago while the residential construction jobs have increased by only 12 percent.
- The average hourly earnings are beginning to move up. It rose to $20.50 per hour for nonsupervisory jobs. That is up 2.5 percent over the year and the fastest gain since 2010.
- The number of part-time workers who wish to have full-time jobs remains elevated. There are 7 million Americans in this status.
- A total of 91 million Americans are not in the labor force. Retirees, spouses looking after kids, college students, and the disabled are among those not in the labor force. Because of rising population, this figure should also rise over time. However, the pace of increase of the people not working in recent years has been higher than normal.
- Americans are defined not by birth, but by what they can achieve. It is said that common sense and hard work are all one needs to succeed in America. For example, an unschooled drifter named Benjamin Franklin ended up inventing many new things to improve the lives of ordinary people because he was out there working every single day. Not hindered by his parent’s illiteracy, Abraham Lincoln learned to read and write on his own without formal schooling in another example. Andrew Carnegie delivered newspapers in Pittsburgh as a teenager to get ahead and eventually became one of the wealthiest, after gladly leaving the old, stuffy world of Downton Abbey. Harriet Tubman risked her life many times to re-enter slave states in order to help more people gain freedom. Her words: “Even when you are tired, you keep going.” Fewer Americans today appear to live by the same enterprising spirit.
In spite of rising mortgage rates housing has “good fundamentals” and is expected to continue to improve – that is the remark from the new Federal Reserve chairman.
After a little more than a week in her role as the fifteenth, and first female, Chair of the Board of Governors of the Federal Reserve, Janet Yellen testified to the House Committee on Financial Services Tuesday in a lengthy, 6-hour long session punctuated by a few recesses. The major takeaways of her testimony are (1) that monetary policy will continue on its current path of a gradual reduction in quantitative easing as long as there is no notable change in the economic outlook, (2) the current outlook is for continued economic improvement, and (3) the Fed will monitor the outlook and adjust the path of monetary policy in line with expectations.