Unemployment and Why Housing Continues to Struggle
Each month when the Labor Department releases the statistics on unemployment and job creations, the numbers often do little more than confuse. Some months it looks as if they’re improving and others they seem to reflect a recession that won’t leave.
The employment numbers as reported often have little significance in the short-term, as they do sometimes fluctuate wildly; and they don’t always paint an accurate picture. For instance, while this month’s report showed an increase in the unemployment number from 9.6% to 9.8%, it only includes those who are actively seeking jobs. Those who have become so discouraged that they’ve given up their job search aren’t included—and that makes for a much higher number.
For a better understanding of unemployment it’s helpful to take a look at the overall trends, allowing us to see where we are and where we need to go in order to be in a legitimate recovery. The graph below from Calculated Risk helps provide that view. It shows just how far employment has fallen relative to other recessions and provides a good picture of where we need to be in order for the housing market to begin growing again.
What we see is that job losses during the current recession (I know it’s supposed to have ended, but the numbers tell a different story) were far more severe and show us further from recovery than any recession of the past 60 years. And the sad reality for millions of those unemployed is that their former jobs will never return. The ultimate impact upon the housing market has been and will continue to be dramatic; a robust housing recovery seems more than unlikely—more likely, impossible.
Sure, some sectors of the economy have seen improvement, and others will begin to improve; but the recovery will be slow and painful. In those areas where jobs are plentiful, the housing market will seem almost normal. However, the overall economy will continue to be plagued by the fallout from higher than normal unemployment, and the housing recovery will be grievously slow.
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