National Economic Outlook - June 2016

Written By:
Ingo Winzer, President

Local Market Monitor

Over the last ten years the percent of households that own a home fell from 69 percent to 63 percent. Not surprisingly, the biggest drop was felt by younger adults. Homeownership in the crucial 35 to 45 age range dropped 6 percent in just the last 5 years. Crucial, because families in this age range who rent, once settled down with children, are less likely to buy a home in the near future.

At the other end of the age spectrum, homeownership for those over 65 didn't drop at all until just this past year, when it edged lower. This could be the start of baby boomers selling their northern homes and moving south. If so, the combination of older and younger Americans opting out of owning will affect housing markets for the next decade.

The economy is growing at a slower pace. Jobs in May were up 1.7 percent from last year, compared to 2.0 percent in previous months. If we see similar figures through the summer, a significant change will be underway.

Part of the slower growth was a drop of half a percent in manufacturing jobs, largely in metals and machinery - probably associated with energy extraction equipment. Retail jobs were up 2 percent, restaurant jobs up 3 percent, so consumers continue to spend freely. Healthcare jobs were up 3 percent, business service jobs were up 2.7 percent - a significant slowing from previous months.

A breakdown of the financial sector shows that the long loss of jobs at commercial banks is over. Meanwhile, more jobs are now at investment funds and in non-bank lending. Does this mean we have less risk in the financial system or just that less of the risk is regulated?

Unemployment in May was 4.7 percent.