From USA Today:
Slowing home market to ripple through job market
With the allure of easy money, thousands of Americans flocked to jobs in the real estate industry during the boom years.
…
As the housing market slows, there will likely be a lot of stories of people who are bailing out of their real estate jobs and other professions related to housing — appraisers, mortgage brokers and home construction workers — and many not by choice. This could send shock waves through the job market and the economy.
That’s because housing helped drive the economy out of the last recession. Almost four out of every 10 jobs created in the past four years were in housing-related fields. At the end of last year, a record 9.8% of U.S. workers were employed in the real estate industry, up from 8.2% a decade ago, according to Moody’s Economy.com. Only the health care industry added more jobs.
“Job growth is the main engine for consumer spending,” says Scott Anderson, senior economist at Wells Fargo in Minneapolis.
“If we don’t get the job creation that we need to sustain spending, the economy could be in trouble as we get into ’07,” he says. “If we don’t get any help from these other (non-housing) sectors, longer-term the implications are slower job growth, which means slower consumer spending, which would eventually discourage businesses from spending. You’d have this downward spiral in growth.”
The provided map puts New Jersey housing related jobs as 9.1% of the total job base, a significant number, but a number inline with the rest of the country. Many have argued that the housing bubble wouldn’t burst due to strong job growth across the country. I’m sure many of them didn’t factor in the fact that job creation and the housing bubble went hand-in-hand.
Caveat Emptor!
Grim
Let them rot in this market…
Add to this the fact that the job growth in Jersey since 9/11 has been overrepresented in government according to Hughes and Seneca. I’d say that is some weak tea.
Seems like Hughes and Seneca are becoming popular characters around here..
From Forbes:
Ten Signs Of A Real Estate Apocalypse
“A sharp recession would certainly cut into income,” Hughes says. He refers back to the economic dip that took place from 1989 to 1991, when the New York-New Jersey area lost about 9% of its job base, and real estate prices went into a skid, not recovering for about a decade. “That really cut into purchasing power. It was across the board. Virtually nobody was exempt.”
Yeah they are just like Terence and Philip. Pull my finger. They know NJ. I had Seneca for my macroeconomics in undergrad. He is a great professor and can be very funny.
NEW JERSEY EMPLOYMENT SHIFTS REPORTED
Shifts in New Jersey’s economy from private to public sector employment highlighted the most recent Sitar-Rutgers Regional Report in February. Editors James W. Hughes and Joseph J. Seneca reported that while there were 45,400 more jobs in December 2005 compared to five years earlier, there were still 3,200 fewer private sector jobs. By contrast, there were 48,600 more government jobs.
The Report stated that by the end of 2005, government with 642,600 jobs had passed professional and business services as New Jersey’s second largest employment sector. In first place were trade, transportation and utilities. Approximately one out of every six New Jersey jobs, or 15.8 percent, is now in government. Meanwhile, manufacturing employment continued to decline, dropping by nearly one quarter from 2000-2005.
Economic Calendar:
3/21 Producer Price Index
3/23 Existing Home Sales
3/24 New Home Sales
3/28 FOMC Meeting
3/30 GDP Q4-Final
3/31 Pers. Savings Rate
local RE prices cannot be supported by public sector jobs. they just don’t pay enough.
http://www.motherjones.com/commentary/columns/2006/03/The_Weak_Recovery.html
Great article about the coming economic recession.
FACT: Almost half the new jobs since 2001 where in RE and the other half in Government related jobs