National Economic Outlook - September 2014

Written By:
Ingo Winzer, President

Local Market Monitor

If you take out the swings in inventory levels that bedevil the quarterly Gross Domestic Product figures, you find that the US economy has been growing at a 2% to 3% rate for the past several years; not bad, but also – and this is the point - not improving. We’d like to think that the economy is slowly getting better and that if we just wait long enough everything will be back to “normal”, but what if that’s not going to happen? It’s not difficult to imagine an economy based more on consumption and speculation and less on investment and production. In such a situation, will owning real estate be a luxury that fewer and fewer people can afford?

In August, jobs were up 1.8 percent over last year, including a 4 percent increase in construction, a 1.4 percent increase in manufacture, a 1.6 percent increase in retail, a 3.5 percent increase in business services, a 2 percent increase in healthcare, and a 2.8 percent increase at restaurants. Government, as usual, provided no new jobs.

The increase in manufacturing jobs is a small sign that factors other than labor costs are becoming more important to manufacturers, such as political stability, nearness to markets, and better quality control. A turn in this sector of the economy would have very good long-term consequences.