Local Market Monitor, a National REIA preferred vendor, recently released their monthly National Economic Outlook where they share their thoughts on developments taking place in the U.S. economy.
National Economic Outlook
By Ingo WinzerJune, 2022There’s good news and bad news. On the one hand, the economy has been adding jobs at a good rate in recent months. On the other hand, a number of forces stand in the way of growth in the future.
One is the fact that the US population didn’t increase at all in 2021. This has never happened before, even during the 1930s depression. The loss of Americans to covid was not the major cause; population growth has been trending lower for years.
Another is that despite recent gains, the level of jobs today is still lower than before the pandemic.
A third is that the boost to income from stimulus payments is over. Usually 4 percent a year, average income was up 6 and 7 percent in 2020 and 2021, keeping the economy alive. But inflation is now eating up those increases; real income gains this year could be close to zero.
And the war in Ukraine will keep energy prices higher for years, even after it’s over. That means higher prices for everything else.
Not to mention that the pandemic is still here.
It’s tough to see a strong US economy in the face of these winds. And that’s bad news for real estate markets. Home prices, which shot up 20 percent in the past year, depend on a steady stream of buyers who can afford them. But how many can?
Compared to October 2021, total jobs in May were up 2.5 percent, including 2.8 percent in construction, 2.4 percent in manufacturing, 1.4 percent in retail, 1.5 percent in finance, 2.8 percent in business services, 1.3 percent in healthcare, 5.2 percent at restaurants, and 1 percent in government.
