National Economic Outlook
By Ingo WInzer
October, 2023
Although the national economy is experiencing a job growth rate of 2 percent, a closer look reveals some concerning trends.
In sectors such as manufacturing, finance, and retail stores, job growth is below 1 percent. The restaurant industry is an exception with a high job growth rate of 3 percent, but under normal circumstances, it would be less than 2 percent. In healthcare, the recent 4 percent growth rate is primarily due to significant gains in nursing homes, which usually have a job growth rate of less than 1 percent. However, they are currently replenishing their staff after substantial losses caused by the pandemic.
A similar situation can be observed in the government sector, where the current 3 percent job growth rate is largely driven by a 5 percent increase in state government jobs. In normal times, all government sectors typically have a job growth rate of less than 1 percent per year.
If we exclude the rehiring related to the pandemic, it becomes evident that the near future will likely see a job growth rate of no more than 1 percent.
The most compelling evidence of slow growth comes from the business services sector, where temporary worker positions are being eliminated due to weak demand.
A sluggish economy is not entirely unexpected, considering that the US population has been growing at a rate of less than 1 percent per year. However, this means that there is no substantial unmet demand for housing, which supports high home prices. Home builders are already aware of this and have been reducing their workforce due to weak demand.
Consequently, home prices will decline, with some markets experiencing faster decreases than others, but ultimately affecting all areas. For instance, in Austin, despite its high population and job growth, home prices have already fallen by 8 percent in the past year, and further decreases are likely to occur. This trend will likely be replicated nationwide.
In September, total jobs increased by 2.1 percent compared to the previous year, with growth rates of 2.7 percent in construction, 0.7 percent in manufacturing, 0.4 percent in retail, 0.9 percent in finance, 1.2 percent in business services, 3.9 percent in healthcare, 3.6 percent in the restaurant industry, and 2.8 percent in government.
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Local Market Monitor’s National Economic Outlook for October ’23
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