National Economic Outlook - November 2016

Written By:
Ingo Winzer, President

Local Market Monitor

The Trump administration will probably launch a local infra-structure construction program to boost local incomes. The money to pay for this program will have to come from increasing the deficit, which will mean higher interest rates.

The combination will increase demand for homes but also the cost of buying them, and will accelerate the trend towards more renting.

Throughout most of the Rust Belt, where Donald Trump won strong support, prices for homes remain very low - partly because the local economic situation has for years been very poor. If government money is routed towards these most visible areas of economic stagnation, local home values will rise for years, as will demand for single-family rentals.

Jobs in October were up 1.6 percent from last year, the slowest rate of growth in three years. Jobs were down 1.2 percent in manufacturing, but up 1.5 percent in retail, 2.1 percent in finance, 2.7 percent in business services, and 2.6 percent in healthcare. Government jobs were up almost 1 percent, mainly at the local level.

Jobs in truck transport were up just 0.4 percent, a very negative development, and temp jobs were up 1.8 percent, also an indication of slower growth.

Overall, the economy has been growing at a slower pace during the past year, with the prospect of even lower growth in 2017 and 2018. A government construction program, even if it can't kick in for a while, will come at just the right time to reboot the economy.