Local Market Monitor, a National REIA preferred vendor, recently released their National Economic Outlook for April, 2019 where they share their thoughts on developments taking place in the U.S. economy.
National Economic Outlook – April 2019
April 15, 2019
By Ingo WinzerBanks as financial intermediaries are an essential part of the economy, lending money from those who have it to those who need it. Historically they funded merchants, monarchs and governments. More recently they made money from industrial corporations. But as funding sources have changed, banks have come to rely more on consumers for their profits.
The problem with this isn’t that consumers shouldn’t borrow money but that banks have a huge incentive to lend them more and more of it. For some big banks, credit cards provide almost a third of their loan income, more than commercial loans, real estate loans, and mortgages. But there’s no natural mechanism to let banks know when they’re lending too much because the quality of the debt isn’t the issue, it’s the volume. At some point consumers will have borrowed too much and will stop spending.
Jobs in March were up 1.7 percent from last year, par for the course. (The wild gyrations when you try to measure them from month to month makes you wonder why the government bothers.) Jobs were up 2.6 percent in business services, 2.5 percent in healthcare, 2.6 percent at restaurants, 1.2 percent in finance. Retail jobs, as is now usual, were flat, government jobs were up half a percent.
Jobs in manufacturing, which had been increasing at an accelerating rate for the past year, were up a disappointing 1.7 percent. That’s still a good rate but lower than in previous months, suggesting the surge we have seen may be a temporary (and maybe a political) phenomenon, rather than a new wave of American manufacturing expertise.
About the Author: Ingo Winzer is President of Local Market Monitor, and has analyzed real estate markets for more than 20 years. His views on real estate markets are often quoted in the national press and in 2005, he warned that many housing markets were dangerously over-priced. Previously, Ingo was a founder and Executive Vice President of First Research, an industry research company that was acquired by Dun and Bradstreet in March 2007. He is a graduate of MIT and holds an MBA in Finance from Boston University. He resides in Cambridge, Massachusetts.