Written By:
Ingo Winzer, President
Ingo Winzer, President
Local Market Monitor
Good
as government statisticians are, they can't make adjustments for the weather. That's
what they'd like to do with the Gross Domestic Product numbers from the first
quarter of this year, which say the economy was down 0.7 percent. It's clear
that nasty weather was to blame rather than some fundamental deterioration. The
negatives were from exports, construction, and people not buying big-ticket
items - just what you might expect if ports are frozen and snow drifts are
blocking your front door.
Statisticians
would like to make adjustments to the various home prices indexes, which not so
long ago were telling us that prices were up 20 percent in Phoenix and
Sacramento, for example - 26 percent in Las Vegas. Now that the booms in those
markets have subsided, it's clear that we were seeing speculation in foreclosed
properties instead of a real rise in home values. Although real estate is
America's biggest industry and largest personal asset, our ability to measure
and understand it is pitiful - compared, say, to our knowledge of employment.
(I
could go on and on about this - how the financial crash and recession were
entirely due to our ignorance about real estate...)
The
employment numbers show an economy that is doing very well, even if the GDP
numbers don't. Jobs in May were up 2.2 percent from last year - in line with
results from recent months - and unemployment held steady at 5.5 percent. Jobs
were up 1.4 percent in manufacturing, 2.2 percent in retail trade, 3.6 percent
in business services, 2.8 percent in healthcare, and 3.4 percent at
restaurants. As always, these days, government jobs were flat.
Jobs
in construction were up 5 percent and jobs in furniture manufacture were up 5
percent. These are small potatoes so far, just hinting at stronger demand, but
a reviving home construction industry would be a powerful and long-lasting
support for the economy.
