The Home Buyer's Korner

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May 8th, 2015

Guy looking up in color

National Unemployment Rates at 5.4 Percent

Jobs AddedMain Street got some good news today with 223,000 jobs added in April. That’s a healthy uptick after the disappointing March numbers. The economy is improving with the spring weather.  However, the Labor Department revised down March’s job gains to 85,000 from the dismal 129,000 reported earlier. If April’s numbers remain near current estimates it will reinforce the arguments that March was an outlier for the economy.

The cold weather, strong U.S. Dollar, and West Coast Port Strike were major culprits for weak economic growth for the first part of the year and two out of three have been resolved. Now the Fed needs to address the strong dollar, but that’s easier said than done with weak economies around the globe. With the latest report, we’re averaging 190,000 new jobs for 2015. It’s not as good a last year’s monthly average of 250,000 jobs, but we’re still early in the game.

Wage increases continue to be at just 2.2 percent on average, so even with this good report it’s unlikely the Fed is going to rush to raise short-term interest rates and many analysts are still pointing to the fourth quarter before they do. Wage growth during the recovery has been a driving reason why many Americans are still struggling and continues to under pace home appreciation, which further pushes first-time home buyers out of the market. Some experts believe wage growth will pick up now that the unemployment rate is hovering around 5.5 percent for several months and that would help both millennial home buyers entering the market and home construction going forward.    

April’s job gains mirror’s last year with job growth slowing in the winter months and then gaining momentum in the spring, which lowers concerns, of a hiring slowdown. The good news doesn’t end. The unemployment rate dropped to 5.4 percent, its lowest mark since May 2008.

April’s jobs report could be the first sign that the U.S. economy is finding its footing again. Last year ended on a high note with strong job gains and robust economic growth. Then the winter of 2015 came in, but more and more it’s looking like a 2014 repeat and that’s not a bad thing. This year three important things need to happen that didn’t last year. Home appreciation needs to remain balanced at about a 5 percent growth rate; job slack needs to improve and interest rates needs to remain low in the near term.

Overall, the economy barely grew in the first quarter this year. Many economists thought low gas prices would be the goose that laid the golden egg and Americans would rush to spend during the winter months, but that didn’t happen. Why were economists wrong? Because Main Street has been through a lot and most economists haven’t taken the time to listen to Main Street and only relied on historical numbers. Maybe this time around they’ll get out of their high-rise apartments or gated communities and visit us on Main Street before reporting back to Wall Street, whereby avoiding costly reporting mistakes that harms both Main Street and Wall Street.

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