It’s been a volatile year for everything from unemployment claims to real estate, which are the two most important building blocks for a healthy economy. Having worked in real estate and by following the economy closely with journalistic prowess, I can say there is light at the end of the tunnel.
In November 2010, the private sector added 180,000 jobs on a national scale, which indicates improvement, but not yet enough to make a dent in the daunting 9.6 percent unemployment rate.
Where did it begin?
Keeping economics as simple as possible, without jobs, consumers don’t spend money. When consumers stop spending money, prices go up as merchant overhead increases. The more overhead a company has, the fewer jobs that company can sustain, and so on and so on.
While it appears to be a deadly cycle of self-defeatism on the highest level, it appears as if private industry has finally come to its senses and said, “Enough is enough.”
Where does it end?
Speaking of backbone, you know as well as I do that the backbone of the country is the everyday American family. You, your neighbors, your friends; everyone has been impacted in one way or another by a soft market, and we aren’t out of the woods yet.
The economy needs to consistently add 200,000-300,000 jobs per month to begin lowering the unemployment rate, according to chief economist Steven Wood of Insight Economics. While the creation of 180,000 new jobs is good news, the news isn’t quite good enough. The US is still 120,000 jobs short of seeing a significant improvement.
Yet, who am I to look a gift horse in the mouth? Improvement is improvement, no matter how you slice it.
Everything is coming up roses…kind of
The National Association of Realtors reports a third straight month in gains for housing sales for every area in the country except the West, which indicates improvement in the real estate market. However, what we aren’t talking about is how many of those home sales went to investors who intend to make rental properties a primary source of income in 2010 and beyond.
There are still many blockades in place when it comes to private buyers making residential purchases. What more rental home means to the economy is lower equity. Since renters tend to exhibit less of a pride of ownership of residential properties, this can drag property values down, continuing to hurt an already struggling home equity. Either way, the jury is still out on this one.
Can we sustain it?
In my opinion, therein lies the real question. There is a lot of chatter in Washington surrounding the extension of unemployment benefits scheduled to cease in December, according to previous legislation on the Hill. The good news for struggling workers still unable to find suitable employment is that all signs are pointing to “yes” when it comes to benefit extension. The bad news is the same, as the benefits coming up for extension will continue to be a drain on the economy, potentially slowing growth or even bringing it to a screeching halt.
I don’t have a crystal ball to predict the future; only a guide within history to make conservative estimates of what is to come based on a lame-duck Congress and power-hungry Speaker, coupled leadership in all branches that seem to sway in the political wind. Are filibusters in our future? Perhaps, but it is still too soon to tell. The best that the economy can hope for now is a small tinge of improvement toward the end of this decade, and improvement thereafter, albeit slowly. If the economy can sustain unemployment benefits and proposed new tax credits and incentives waiting their turn in Washington to come up for approval, then all will be well. If not, we could find ourselves catapulting back to 2007 and start a recession all over again.
“Two-year low for layoffs hints at hiring pickup”, Associated Press