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The Jobs Report: 3 Good Things and 3 Bad Things for Housing

by Peter Thomas Ricci

The messages for housing were mixed in the BLS’ new report on the jobs market.

The Bureau of Labor Statistics released the October jobs report earlier today, and it’s a doozy, with a multitude of numbers on the nation’s employment markets.

To bring some coherence to the conversation, we’ve spotlighted several specific findings in the report – things that signify both good and bad things for housing.

The Good

1. First things first, the nation’s unemployment rate fell to 5.8 percent, its lowest level since 2008; since the start of the year, the unemployment rate has fallen by 0.8 basis percentage points, or 1.2 million workers. Here’s a great graph from the Wall Street Journal highlighting the decline:

good 1

2. Job Growth – Even more encouraging, for the first 10 months of 2014, the U.S. has averaged 229,000 jobs per month; if that pace continues through the end of the year, 2014 will be the best year for job growth since 1999.

3. Long-Term Growth – Furthermore, in the last 12 months, the U.S. economy has added 2.6 million jobs; that’s the best level since early 2006.

The Bad

Unfortunately, the jobs report was not uniformly good in the news it brought, and it ended up reinforcing many of the themes we’ve been writing about on a continuous basis this year.

1. Stagnant Wages – First, there was the quagmire of wages, which have either been stagnant or have not grown beyond inflation for some time. Here’s another graph from the Journal, to see how entrenched the problem has become:

bad 1

It’s the same point that we’ve made time and again, but it merits repeating – until wages get over their post-recession hump and resume growing, it’s very unlikely that more consumers will enter the homeownership fray, regardless of how low the government makes down payment requirements for Fannie Mae and Freddie Mac.

2. Long-Term Unemployment – This has been a distinguishing feature of the Great Recession, and is troubling news for the housing market; after all, the longer one is out of the work, the less likely companies are to hire you, and it becomes a vicious, self-sustaining cycle – and the share of Americans who have been out of work for at least six months edge up in October. Similarly, the median duration of unemployment increased to 13.7 weeks in October; in other words, the average unemployed worker is out of a job for more than three months.

3. Underemployment Prevails – Finally, and perhaps most troublingly, there are still millions of workers who are languishing in part-time jobs, but would much rather work in full-time positions. Apropos to our earlier comments on stagnant wages, as long as workers maintain an out-sized presence in part-time jobs (and the lackluster wages and benefits that accompany them), it’s quite unlikely that they’ll be taking out a mortgage anytime soon.

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