Weak Jobs Report Another Bump in Road to Recovery

For the second consecutive month, the pace of job creation in the United States slowed measurably, stirring fears of another disappointing chapter in the struggle to stage a durable economic recovery. This back-to back-disappointment in the domestic economy happens at a transitional time in Europe, as reflected in the election results from France and Greece, all of which add to volatility and renewed concerns. In other words, below-trend growth persevering through macro headwinds remains intact as the theme of this recovery.

Conflicting data and the seemingly unending stream of fits and starts continually challenge real estate investors navigating the current environment. Key mandates in this prolonged era of uncertainty include a balanced perspective as well as a decisive, yet flexible, investment strategy. Investors need a plan that not only lowers risk but at the same time, keeps the gates open to unique opportunities. Recognizing the challenge inherent in this, a historical perspective may be helpful.  History reminds us that a recovery from the simultaneous shocks of a financial crisis and a major recession require significantly more time and stimulus than a cyclical contraction, a process that could extend five to eight years compared to the more typical two- to three-year span following a cyclical recession. The pattern observed thus far since the recovery began is basically normal if not a bit better than expected. Secondly, the magnitude of the crisis called for unique and unprecedented remedies, the repercussions of which cannot be resolved quickly, in the United States and elsewhere. The corollary effects of reduced public and household debt, e.g., lower spending and higher taxes, must occur at some point, both of which stunt growth. The timing and magnitude of austerity is the subject of much debate as too much, too fast can result in another recession, and too little could culminate in another debt downgrade and the implications inherent in such an event.