National Economic Outlook
By Ingo WInzer
August, 2023
The rate at which the economy is adding jobs slipped to 2.1 percent in July, a strong showing in normal times but now just an indicator that normal times are not yet here and a warning that once we get to a sustainable level, it will be very modest.
Data from last year show that some markets had a decent increase in population, fueling their economy and especially their real estate markets, but most did not. Population growth is the backbone of demand for real estate, for home prices, and for rents. It’s very likely that we’ll see a growing gap between a handful of markets with good economic growth over the next few years, and a large number of markets with little or no growth.
In some high-growth markets home prices will hold up fairly well – although they’re too high almost everywhere – but in most others they’ll come down again to be in line with local incomes. Average income in the US was up just 2 percent last year, and adjusting for inflation it was actually down.
The 2.1 percent increase in total jobs in July includes increases of 2.5 percent in construction, 0.9 percent in manufacturing, 0.4 percent in retail, 1.1 percent in finance, 1.6 percent in business services, 3.7 percent in healthcare, 3.7 percent at restaurants, and 2.4 percent in government.
The modest increase of jobs in business services is worrying because it’s a measure of current business activity. Temporary jobs – always the first to go when business demand wanes – decreased 5 percent in July.