Real Estate Market Commentary - February 2015
by Peter L. Zachary, MAI, MRICS
The front page of the New York Times on February 24, 2015 had an article entitled "JOB COUNT FINDS 3 BEST MONTHS SINCE LATE 1990s - Advance in Wages Seen - Many Rejoin Search for Work - Upturn May Affect Politics." This is important because jobs affect the economy and people's ability to buy houses. Parts of that article stated; "The economy cruised into the new year with a burst of fresh momentum, adding jobs at the fastest pace since the boom of the late 1990s and lifting unemployment and wage prospects for millions of Americans left behind in a long but mostly lackluster recovery.
Since November 1, employers have hired more than one million new workers, the best performance in over a three month period since 1997. More jobs were created in 2014 as a whole that in any year since 1999.
"This is the best employment report we've had in a long time," said Guy Berger, United States economist at RBS. "The labor market looks like it is in really good shape as we head into 2015."
If the job market continues to gather strength in the run-up to the Presidential election of 2016, as some forecasters now predict, the rebound promises to reshape the political landscape, as well as the economic one.
Fierce Republican criticism of President Obama's economic policies, a touchstone of the 2012 campaign, could resonate less with voters the next time around, Hillary Clinton or another potential Democratic nominee might have an easier time making the case for keeping the White House in Democratic hands.
The key, say political experts from both parties, is how the bounty from the renewed growth is shared and whether wages for middle-income works rise more quickly, along with other yardsticks like overall economic activity in the stock market.
Good statistics always favor the incumbents or the incumbent party say Wayne Berman, who served as the top Commerce Department official under the first President Bush and more recently as a senior advisor to the Romney and McCain campaigns.
"The challenge for Republicans remains the same in the face of today's numbers," said Mr. Berman, now head of government relations at the Blackstone Key Group. "We have to advocate policies that are relevant to the middle income Americans' everyday lives."
On the wage front, the jury is still out. Last month, hourly earnings rebounded after falling in December, increasing 2.6 percent for the last 12 months and suggesting that the benefit of a tighter job market could soon begin to spread more broadly to ordinary workers. But the major question after Friday's report is whether better wage growth can be sustained.
Nevertheless, even the one seeming negative note in the January jobs report - an increase in the employment rate to 5.7 percent from 5.6 percent in December - was actually an encouraging sign, analysts said, since it was mostly cause by more jobless Americans looking for work a labor demand heats up.
The overall picture was so encouraging, experts said, that Federal Reserve policy makers may feel more comfortable starting their long-awaited move to raise interest rates in June, a step Wall Street has generally expected to be delayed until September or even later.
"Employment growth is astonishingly strong," said Ian Hepherson, Chief Economist at Pentheon Macroeconomics. "With ever indicator we follow screaming that payrolls will be very strong for the foreseeable future, wage pressures will intensify."
Although the latest data was stronger than most analytics expected, it is unlikely to change the timetable for Federal Reserve officials because it is consistent with the Fed. expectations. Janet L. Yellen, the Fed's chairwoman, and other officials have signaled repeatedly that they would like to start raising rates this summer.
"The good news is that there was hiring across a wide range," said Tara M. Sinclair, a professor of economics at George Washington University and chief economist at Indeed.com, one of the nation's largest job posting sites. "People worry about having too many lower end jobs being created," she said. "But we need these jobs."
More to come next month. Read previous Real Estate & Housing Market News.
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