National Economic Outlook
By Ingo Winzer
Even though the pandemic is winding down, it still affects the economy and our ability to measure it. We don’t know how much recent gains in employment are due to new growth, how much still to covid recovery. The clearest example of the problem is the restaurant sector, which dropped 6 million jobs when covid hit. Before that, restaurant jobs increased about one percent per year, close to the increase in the population. But in the past year they increased six percent.
Clearly, much of that six percent is just the recovery of old jobs. During the past year, total jobs increased 3.3 percent, which in normal times is very high growth, but if a big piece of that growth is just recovery, how much is the economy actually growing? That’s a big question, especially when we’re worried about a new recession. Other measures, like new business formations, suffer from the same problem; we just don’t know how strong the economy is right now.
The 3.3 percent increase of jobs in January, compared to last January, included increases of 4 percent in construction, 3 percent in manufacturing, 1 percent in retail, 2 percent in finance, 3 percent in business services, 4 percent in healthcare, and 1 percent in government.
Our chief concern is with current economic growth, but we need to pay attention to a couple of longer-term trends that will affect the future. Growth of the US population has trended steadily lower for more than a decade; the latest estimate from the Census shows an increase of less than a half percent in 2022. And the rate at which people move from one residence to another hit an all-time low of 8 percent in 2021; it used to be 15 percent or more.
These trends point to future difficulties for the economy – which is built upon the premise of constant growth; and for real estate markets – which expect an expanding market plus a high rate of turnover.
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