Local Market Monitor (a National REIA preferred vendor) recently released their National Economic Outlook for January, 2018 where they share their thoughts on developments taking place in the U.S. economy.
National Economic Outlook – January 2018
January 16, 2018
By: Ingo Winzer
One of the bright spots of the economy is the financial sector. For the last several years jobs in finance increased at a steady pace of almost 2 percent per year; there are now almost a million more than in 2010. These are mainly well-paid jobs – over $70,000 per year – that boost the real estate market.
While these jobs still increased 1.6 percent in 2017, this is slower growth than just last year. Because these jobs are associated with individual transactions in banking, wealth management, debt management, insurance, and real estate itself, they are very susceptible to automation and internet replacement.
With ballooning personal debt on one side and high invested wealth on the other, the financial sector is larger than ever, but the future of jobs in finance is likely to be less rosy. This by itself isn’t bad for real estate, it’s just another indicator of the future tilt towards more renting.
The ascent of the financial sector is itself a potential liability because it’s built on ever larger amounts of debt. The last time around, Wall Street offered good returns through securities backed by risky mortgages. The same pressures for high returns can easily produce similar risks when so much other debt is floating around.
Jobs in December were up 1.5 percent from last year, in line with recent growth levels. Manufacturing jobs were up 1 percent, jobs in retail and government again were flat. Jobs were up 2.5 percent in business services, 2 percent in healthcare, and 2 percent at restaurants. Unemployment remains at 4.1 percent.
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.