How Will the December Jobs Report Affect 2013 Housing? We’re just a few days into 2013, but we’ve still got 2012 on our minds. Specifically, we’ve got the just-released December 2012 jobs report on our minds. So, what do the numbers look like?
The U.S. economy ended the year with a 7.8% unemployment rate – the same rate as we saw in November. In December, America added 155,000 jobs to its work force. That includes seasonal adjustments (for example, account for all of the jobs that were only temporary – like retail workers that were hired only for the holiday shopping season). And speaking of the holiday shopping season, even those numbers were disappointing. Americans didn’t do as much shopping as experts had anticipated. There was a shopping surge right at the end of the holiday season, but as whole, overall sales were down. Remember, consumer spending plays a huge role in the economy as a whole! Adding to the disappointment, the number of unemployed actually rose 164,000 to 12.2 million. That’s according to a survey of households that’s separate from the survey of businesses that’s used to calculate the official unemployment rate. Economists agree that all of these numbers are proof that the economy is growing at a snail’s pace – and that means the economy is very vulnerable right now. And when the economy is vulnerable, people don’t like to make major purchases – like homes.
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These numbers aren’t likely to have anyone salivating. Not investors, not potential homebuyers, and not anyone else who is crucial to kicking the housing market into high-gear. A positive sign from December’s jobs report? Construction firms added 30,000 jobs – which is the most they’ve added since 2011. Part of that surge comes from an increase in new home construction, but part of it also comes from the demand to rebuild areas left devastated by Hurricane Sandy. Another encouraging sign? Hiring didn’t wane because of the fiscal cliff showdown. Now with all of the totals in, the U.S. job market added an average of 153,000 jobs each month in 2012. With 155,000 jobs added in December, it’s obvious that hiring remained stable, even with all of the fighting and instability on Capitol Hill. That’s good sign because there is more fighting to come in Washington over the next few months, specifically over the debt ceiling.
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So, what does all of this mean as the housing market tries to get back on its feet? First and foremost, it means that the Federal Reserve is going to keep its incentive programs (like Quantitative Easing) in high-gear. You can expect interest rates to remain low for the foreseeable future, which will convince some people to buy. Still, though, there are millions of Americans out of work – which means there are millions of people who can’t go out and buy new homes, even if they wanted to. No incentive in the world can change that. And, remember, the unemployment rate only takes into account people who are receiving unemployment benefits. People who have maxed out their benefits or have stopped looking for work (for example, to go back to school or to take an early retirement) aren’t included in the tally.
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For the Americans that are working, there was a positive sign in the December jobs report. So far, hourly pay is staying ahead of inflation. That means that the working Americans have a shot at going out and taking advantage of low prices and low rates. The big question is – will they? They’re starting to, but only time will tell if they keep at it!
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