Driving in the Slow Lane
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There’s been a lot of back-and-forth lately about the unemployment picture. The US Bureau of Labor Statistics tells us that the jobless rate has fallen below 9% for the first time in two years. Some see this as further evidence of economic growth and, perhaps, an endorsement of the Obama administration’s efforts. Others say no, the federal government has massaged the numbers for political gain and hasn’t been forthright about the ranks of either the underemployed or people who have simply given up looking for work.
I suspect the truth is somewhere between the cheerleading and the naysaying. Certainly we’ve gotten plenty of positive news since the end of 2010, independent of the federal job numbers.
Better than-expected holiday sales have segued into a more sustained uptick in consumer spending as 2011 goes on. Both small employers and larger ones are talking about hiring again, at least if surveys from the National Small Business Association and Manpower Inc. are to be believed. The Federal Reserve says its latest Beige Book survey of central banks shows that economic activity is up in almost every region of the country. Even if you disregard all of these reports, just walk into a commercial real estate conference and feel a much higher energy level than you would have sensed a year ago.
But while adding 192,000 new jobs in February is an improvement on the 67,000 that were added in January, it’s not enough to regain momentum. If you’re stuck in bumper-to-bumper traffic and crawling along at 5 mph, you’re still crawling even if you accelerate by 40% to a white-knuckle 7 mph.
US employers will have to add jobs at a much faster clip to not only make up for the eight million that were lost in the downturn, but also to overcome the effects of public-sector downsizing. There’s a little thing known as population growth to factor into unemployment-rate projections, too. Also, what kinds of jobs are being added today: white-collar occupations that use office space or part-time, low-paying retail positions?
And what about people who have abandoned the search for work? How many are out there? Optimistic predictions say that as the economy and hiring improve, these thwarted job-seekers will get back into the mix. I’m not so sure, especially since we’re hearing more reports of employers who won’t consider hiring someone who isn’t already gainfully employed.
The implication for the office sector: outside the core markets, we may be looking at a glacially slow recovery in occupancy. Agree or disagree? Let us know.
(To search across all ALM blogs, go to www.Lexis.com.)
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I believe most everything that has been wriien so far, and I believe there is another factor that politicians and the press is just now beginning to talk about. Many of these "jobs" will never come back, and why should they. We have done very little for our underskilled workers to get the real training for the jobs of the 21st century. If the unions really wanted to help, fight for retraining their workforce to perform the highly skilled jobs that we, as Americans, can do, and stop whining about the jobs we have lost. Those jobs that still make a 20th century plastic widget. Look forward not backward. Until we address this issue, it may be a long time before we see 5-6% unemployment rates
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Paul I think you are spot on. The unemployment stats understate the severity of the problem we face. The govt. unemployment rate doesn't count all of the folks who gave up looking and who would return to work if they could find jobs. This population, referred to as those who are marginally attached to the workforce" continues to grow. The real unemployment rate if all of these people are counted is between 15% and 18%. Moreover, population growth makes the 192,000 new job number for February look even more anemic. Lastly, the lost spending power resulting from under-employed people is further exacerbating retail spending and recovery of the housing sector. Replacing the 8 million lost jobs just puts us back to the beginning of the crisis. In order to really catch up, we need another 3 to 4 million jobs and a monthly pace of in excess of ~350,000 new jobs. Implications for all sectors of the real estate economy are dire. One needs only to look at real rental growth and vacancy rates. This is a problem that for some reason isn't getting the policy attention it deserves. Businesses want some visibility around what to expect in terms of government policy that may have a direct effect on the value of new investment. Our leadership needs to stop the partisan feuding and do everything possible to ensure investors that no negative action will be taken to deter investment and that the recovery of our economy is in the hands of private investment.