National Economic Outlook
By Ingo WinzerDecember 30, 2022
New home price data show that the boom is over. Although prices in the third quarter were up 16 percent from last year, they were up only 1 percent from the second quarter. And prices in September were actually down from the peak in May-June.
Most local markets are over-priced compared to local income, so the question now becomes whether home prices come down again or if they just wait for incomes to catch up. A renewed recession would produce the former outcome and right now the US economy could go either way.
The speed with which higher mortgage rates capped the boom implies a pretty thin market, which means that the readjustment of home prices will be much faster than after the last boom, in 2005.
Jobs in November were up 3.3 percent over last year, but that was down from the 3.6 percent in October, and most of that increase is still recovery from the pandemic rather than new growth.
Jobs were up 3.3 percent in construction, 3.4 percent in manufacturing, 1.4 percent in retail, 1.7 percent in finance, 3.4 percent in business services, 3.4 percent in healthcare, and 1.4 percent in government.
The increase of jobs in business services is encouraging because these are new jobs, not recovered one, but the increase was much less than in October, which is worrying. And businesses used fewer temporary workers, which often is a sign of belt-tightening when they expect lower revenues.
On the positive side, the price of energy is back to the pre-Ukraine war level. This might be temporary but if sustained will further ease inflation.
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