The Relationship between the Jobs and Housing Markets05-08-2009 |
The Department of Labor reported today that nonfarm payrolls contracted by another 539,000 jobs and the national unemployment rate now stands at a 26-year high of 8.9%. Perhaps even more concerning is that, according to the DOL reports, there were only two sectors that were actually adding jobs; health care and government.
However, recognizing that employment data statistics are backward looking and tell us more about how the labor market was as opposed to the where the labor market is today or will be in the future, the fact that the pace of jobless claims are now moderating is encouraging.
As we look behind the numbers, there are clearly areas of the country where the current employment situation is not as dire as in other areas. The table below which help depict these differences:
Source: U.S. Bureau of Labor Statistics. Data was last updated on April 29, 2009.
From this data, it is interesting to observe that the two areas that were hardest hit by the housing downturn; California and Florida, are also the two areas of the country that have unemployment rates higher than the national average. Conversely, in Texas, which is an area of the country where we have seen some recent pockets of strength related to housing, the rate of unemployment is significantly lower than the national average. While the relationship between housing and unemployment may not be perfectly correlated, we, at Hennion & Walsh, are starting to pay more attention to the connection. It is apparent to us that for the U.S. economy to grow out its current recession, we need consumers to start spending again given the impact that consumer spending has on gross domestic product (“GDP”) growth. Improving job and housing markets can clearly provide both psychological and concrete assistance in this regard.