You can learn more about me and my services by watching this quick video.
Watch Video

Economic Silver Lining

In a world of bad news, it’s nice to look at the silver lining every once in a while. The labor market started out 2013 by quietly reaching a milestone that virtually went un-noticed. According to in a study by RBC Capital Markets, private-sector employment topped its pre-recession high, under one condition: if housing-related industries are excluded.Excluding these housing-related sectors, private payrolls increased to 99.5 million jobs in January, exceeding the previous high of 99.4 million in January 2008, the RBC study says. On the other hand, jobs in housing-sensitive sectors such as construction, wood product manufacturing, furniture sales and architectural services are still extremely low. RBC says this industry is still struggling, still 3 million jobs below their total before 2007.Housing began to rebound last year, but the recovery is a slow and steady race. Although more homes were built, sales and prices began to rise; it’s still not quite enough. For example, the construction industry has gained nearly 300,000 jobs the past two years, but they are still down nearly 2 million jobs from the levels in 2007. If all those jobs had been recouped, the nation's unemployment rate in December would have been 6.6% rather than 7.8%, according to a recent report by the Federal Reserve Bank of St. Louis.Experts in various fields agree that the economic recovery will not take off until housing kicks into a higher gear. "Housing has massive tentacles," says RBC Chief U.S. Economist Tom Porcelli in a recent article from USA Today. "Low (interest) rates encourage people to buy a house and fill it up with furniture, and that creates manufacturing jobs and the cycle becomes virtuous."Despite the incentives available to buy a home, gaining ground could take longer than expected. Economist Patrick Newport of IHS Global Insight predicts housing starts of 966,000 this year, up from 781,000 in 2012. But he said that normal levels won’t even start until 2015 because of high mortgage debt and strict lending standards.It is clear that in some industries, the jobs are back. This brings both good news and bad news to the economy as a whole. First, it shows that we are on the upswing, jobs are up and unemployment is down. Secondly, it shows the crucial importance of the housing industry to the overall economic growth. Because the housing sector affects nearly all other industries, a more vigorous housing recovery would indirectly boost sectors such as education and health, professional and business services, and leisure and hospitality. Alternatively, a slump in the housing recovery can quickly and easily drain other industries back into a recession.

More Articles