Thursday, January 17, 2013
A sign of good things to come?
The Financial Times reported that jobless claims reached a low that has not been attained in over 5 years. The article, which can be found here, describes the overall housing market as a major cause of this. The current housing market has been a great boost to the U.S. economy at a time when the fiscal cliff debate is dominating the news.
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The housing market has by no means been 'a great boost', but it is slowly improving. The jobless claims in American are better representative of a slowing improving overall economy. As each sector (housing...but all other sectors included) improve in 2013, employment will improve as well. As we've seen in class models, as inflation increases, from increases in government demand, from increased overall gdp--employment will increase as well.
ReplyDeleteWith the rebuilding efforts following Hurricane Sandy providing a significant boost to the construction market, I am wondering if the numbers mentioned in the article are skewed. If so, while it does provide a short term boost, it may not be a sign of lasting recovery. While I do not know exactly where the new housing numbers come from, it is important to keep in mind exogenous shocks that do not hold up in the long run.
ReplyDeleteRaising building houses by the offer side is not enough. The demand should react in front of this supply. In the article, the author said that "builders began construction of houses and apartments beating expectation". One should know that American are having to rent as they cannot get a mortgage, spurring apartment construction. I think that the builder sector is reacting which is good but one should be careful with the over-reaction. It means that the economic recovery should be gradual and nonviolent.I agree with Millan Mulraine, the positive scenario could be a false scenario of reactivation after all news in which US is in the limbo among recession and reactivation. In this case, I prefer to be skeptical.
ReplyDeleteI tend to overlook any argument that uses the jobless rate at its core. The unemployment numbers can be easily manipulated to show either promise or failure. The unemployment rate reacts only to those workers who are out of a job, but actively seeking employment. It is almost impossible to discern whether the numbers are going down due to a rising housing market (as this article suggests) or it is simply a case of more Americans giving up their search for work.
ReplyDeleteI agree with Joe in that this article shows promise that the housing market is slowly picking up although, it is hard to say that this will last. The housing market is giving the economy a good boost but far more needs to be done to get the economy back to where it needs to be.
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