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One Thing Is Clear: Not Enough New Jobs

12:00 AM, May 5, 2012 • By IRWIN M. STELZER
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Then there is the housing sector, always the most difficult to analyze, in no small part because several indexes are published and often point in different directions. The fairest summary seems to be this. Prices have stopped falling, and if prices paid for foreclosed (repossessed) properties are excluded, might be rising a bit. The inventory of foreclosed houses that overhangs the market is being worked off as investor groups buy them for refurbishment and conversion into rental units. The rise in pending home sales (deals not yet closed) means that new-home sales and sales of existing homes will rise in coming months, and realtors (estate agents) in some cities are already complaining of a lack of properties to show potential buyers. The supply of homes that are empty and waiting to be sold is down, as is the apartment vacancy rate. The recovering economy has stimulated the rate of household formation—the sighs of relief you might hear are parents regaining control of their television sets and fridges. There are one million more households in the U.S. than at this time last year, the largest increase in six years. Construction of new homes is scheduled to increase by about 24 percent this year.

All of these figures do not represent a return of the glory days before the housing bubble burst: mortgages are still difficult to come by, and more foreclosures are in store. But along with my conversations with builders they suggest that the worst is over, and that the housing sector will not be the drag on the economy that it has been for the past several years. Moreover, the recovery seems to be spread across both the country and price brackets. Phoenix, Arizona, perhaps the hardest hit market, saw prices fall by over 50 percent. Now, realtors report multiple bids on lower-end houses. On the other end of the country, and the price spectrum there is New York City, a magnet for foreigners who are out-bidding local billionaires who bid a mere $40 million for top-of-the-line condominiums—with the record sale so far this year topping $50 million, small change by London standards, but enough to make more than a ripple in the Big Apple property market.

The politics of all these data are obvious. Obama will claim that his policies have created hundreds of thousands of jobs, and converted a serious downturn into an upturn. Romney will point out that after spending trillions of dollars the president has succeeded only in restoring the unemployment rate to the level he inherited.

We know this: The American economy is continuing a sluggish recovery, but one so far incapable of creating enough jobs for Americans who want full-time work. What we don’t know is where we are headed in the next several months.

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