Tuesday, November 14, 2017

National Economic Outlook - November 2017

Written By Ingo Winzer, President of Local Market Monitor Inc.

Local data for October aren't available yet, but the overall effect of the hurricanes in Texas and Florida on jobs will probably be transient. Overall, jobs in the US in October were up 1.4 percent from last year, up from 1.2 percent in September and in line with previous months.

This doesn't mean the affected local markets will snap back. In both the Houston and Miami areas about 15,000 jobs were lost. (In Puerto Rico, the devastation is so great that no data at all are available.) Ironically, although the Houston economy may recover faster as refineries get back on-line, Miami will probably have a more complete recovery. Even before the hurricanes, growth in energy-dependent Houston had been slow - almost zero in 2016 - while growth in South Florida has been high for years, buoyed by foreign capital.

The hurricanes came on top of a national economy that the Fed says is going great guns but in terms of new jobs has been steadily slowing. Last year job growth was 1.7 percent, the year before that 2.1 percent. This year 1.5 percent is the new normal.


In October jobs were up 1.4 percent from last year, including (on a very positive note) 1.2 percent in manufacturing, 2.5 percent in business services, 1.9 percent in healthcare, 1.9 percent at restaurants, and 1.8 percent in finance. Retail jobs were down a half percent and government jobs were basically flat. Unemployment in October was 4.1 percent.

Tuesday, October 17, 2017

National Economic Outlook - October 2017

Written By: Ingo Winzer, President of Local Market Monitor, Inc.

The job data for September show some of the effects of the recent hurricanes. Overall, job growth slowed to a 1.2 percent annual rate - down from the 1.5 percent of previous months.

The drop was mainly due to a loss of jobs in retail and at restaurants, as you would expect in storm-ravaged areas. But the big question for the national economy is what comes next? Sure, rebuilding in Texas and Florida will provide a temporary boost in construction-related jobs, but will all the old jobs eventually reappear? The Houston area and Southern Florida have been among the fastest growing parts of the country for decades, so we can expect they will again - eventually.

But outside calamities can also accelerate trends that had been in the works for some time. Storms and floods and fires - because they provide an opportunity for individuals and businesses to re-assess their situation - can be a tipping point for local economies, just ask New Orleans. And with the national economy already running slower, it won't take much for weakness in one part of the country to spread to others through lower demand for goods and services, a lot of which depends more on psychology than immediate need.

Too cataclysmic? Probably. But my job is to anticipate things that might happen, and in a fragile economic environment any number of things can quickly have effects much bigger than we would have thought. Before 2008 who would have guessed the world economy would be felled by sub-prime mortgages?


In September, jobs were up 1 percent in manufacturing, 1.8 percent in finance, 2.6 percent in business services, 2 percent in healthcare, 1.4 percent at restaurants - and were down 0.4 percent in retail. Unemployment was 4.2 percent.

Tuesday, September 12, 2017

National Economic Outlook - September 2017

Written By:
Ingo Winzer, President


Local Market Monitor

Why do the monthly economic statistics matter to long-term investments in real estate? It's partly a matter of timing - you'd prefer not to make an investment just as the economy is tanking. But aside from spotting the infrequent recession, investors can dissect current performance to take advantage of the strategic changes that will affect their long-term decisions.

One of the ongoing changes in the current economy is the rapid drive for efficiency fostered by computer technology, which has eliminated many jobs altogether and allowed others to be done overseas - probably the biggest dislocation since technology began eliminating farm jobs a hundred years ago, when most people lived on farms. The TYPES of jobs now being eliminated (or created) - and where they're located - has an enormous effect on the types of housing people need. The bifurcation of incomes - more high, more low, not as many in the middle - is also an opportunity for investors who can identify where and how real estate demand is restructuring. It's easy enough to SAY these changes are taking place, but translating them into actual investment decisions can only be done effectively by finding the fine print in the short-term statistics the government so generously supplies.

Jobs in August were up 1.5 percent from last year, this seems to be the new normal in 2017. Jobs were up 1 percent in manufacturing, 2 percent in healthcare, 2.5 percent at restaurants, 3 percent in business services, and were flat in retail and in government.


For those who like very early warning, jobs in finance were up 1.8 percent - lower than the 2.3 percent rate earlier this year. Growth in finance jobs peaked 18 months before each of the last two recessions.

Wednesday, August 9, 2017

National Economic Outlook - August 2017

Written By:
Ingo Winzer, President


Local Market Monitor


If the number of jobs in retail, instead of increasing 2 percent a year, will slowly erode from now on, is this a bad thing for the economy? Retail sales seem to be doing fine, its just taking fewer people to produce those results.

From an economic perspective, any efficiency is a good thing. But looking at the larger picture, the 300,000 jobs with annual pay of $30,000 that AREN'T being created every year are a blow to families for whom this is often a second income. Aside from restaurants and hotels, retail is the lowest-paying sector in the economy and the last possibility for people with no special skills. The $9 billion of retail salaries saved each year will go into somebody's pocket, but the social consequences of yet another disappearing opportunity near the bottom of the ladder may end up being a lot greater than that.


Overall, the number of jobs in July was up 1.5 percent from last year, in line with results so far this year. Jobs were flat in manufacturing, retail and government - which together make up a third of all jobs - up 2 percent in finance, 3 percent in business services, 2 percent in healthcare, and 3 percent at restaurants. In the construction sector jobs were up 3 percent, which seems like a lot but, starting from such a low level, it's nothing to write home about.



Tuesday, July 18, 2017

National Economic Outlook - July 2017

Written By:
Ingo Winzer, President


Local Market Monitor

Jobs in retail sales were flat again in June. What's going on here? I've been harping on this for a few months but the picture still isn't clear. Is the lack of growth in retail jobs an indicator that growth is slowing down? Or does it just mean that we're buying more stuff on-line?

In dollars, retail sales (including on-line) increased 4 percent in 2014, 3 percent in 2015, 3 percent in 2016, and 4 percent so far this year. So, there isn't a downward trend in spending, at least not in the past few years,. But this IS slower spending than the 5 and 6 percent increases we used to have. What we're probably seeing is a combination - more internet sales, but also a SHIFT in spending, mainly by people whose income has been flat. Consider that 40 percent of renters pay more than a third of their income for housing, and a bunch of the rest now goes for phone and internet service.

All of this doesn't completely answer our question, because the lack of new jobs in retail - the lowest paying part of the economy - isn't being made up elsewhere. While internet sales did increase, we're ALSO seeing a slowing of overall growth. Jobs in June overall were up 1.5 percent from last year - flat in manufacturing, retail and government, but up 3 percent in business services, 2 percent in healthcare, and 2 percent at restaurants.

Monday, June 12, 2017

National Economic Outlook - June 2017

Written By:
Ingo Winzer, President

Local Market Monitor

Continuing the trend of recent months, in May the number of jobs in retail sales was no better than last year. This very worrying development isn't really so surprising because we've seen that the income of consumers has barely increased for years, while the amount of debt they're carrying has grown. At some point that has to translate into less spending.

Other parts of the economy are still doing well. Jobs in business services, for example, are growing at a faster rate than last year. Jobs in healthcare are growing at a slower rate, but still at a good clip - and growth seems to be fine in finance, construction and at restaurants. Ok, jobs aren't growing in manufacturing or government - almost a quarter of the economy - but they haven't for a while. So why is the poor showing in retail now so important? Because it's a LEADING indicator.

Jobs in healthcare didn't even feel the 2008 recession until 2009, jobs in business services were still doing fine in late 2007. But jobs in retail had already sputtered in 2006, well before the crash in early 2008. Stay tuned.

Overall, jobs in May were 1.5 percent higher than last year. This seems to be the new normal in 2017, as 1.8 percent was the new normal in 2016. Jobs were up 3 percent in construction, flat in manufacturing, flat in retail, up 2 percent in finance, 3 percent in business services, 2.3 percent in healthcare, 2 percent at restaurants, and a half percent in government.

Unemployment is at a low 4.3 percent, whatever that means these days when many people have just dropped out of the regular workforce.

Thursday, May 11, 2017

National Economic Outlook - May 2017

Written By:
Ingo Winzer, President


Local Market Monitor

I noted last month that the number of jobs in the retail sector, while still higher than  a year ago, is only growing very slowly. Statistics from April point to the same disconcerting conclusion, so we'll now examine more closely what's going on here. There are two important reasons: when people buy less stuff, the rest of the economy follows; and, retail is one of the last sectors where people with no special skills can find a job. Retail provides 11 percent of all jobs in the US.

The rate of growth in retail jobs was 1.4 percent in January, 0.8 percent in February, and 0.3 percent in both March and April. Is this because people are buying less stuff? Very likely. Sure, internet sales are up but internet sales are still only ten percent of retail sales. For the first three months of the year, retail sales in dollars were up 4 percent, but subtract inflation of 2.5 percent and sales are pretty meager - concentrated in cars (bought on credit), furniture (bought on credit), gas (prices are higher), drugs (paid by insurance), and building materials (mainly bought by businesses). People are buying less real consumer stuff - food and clothes.

Measuring things is difficult, so statistics aren't always correct. It's too early to conclude the economy is in trouble. But a few more months of this trend and I'll be willing to stand up and start shouting.

Overall, the number of jobs in April was up 1.4 percent from last year, the LOWEST rate of growth since the last recession. Jobs were essentially flat in manufacturing and retail, up 2 percent in finance, 3 percent in business services, 2 percent in healthcare and at restaurants. The government is a non-player. Unemployment fell to a low 4.4 percent in April.