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National Economic Outlook (July 2012)

July 16, 2012 by Marco Santarelli

Why has this economic recovery been so sluggish? In a normal recovery, job growth would be accelerating at this point, rather than dragging along at the same modest level month after month.

One culprit, off course, is the housing boom that left many homeowners with more debt than their home is worth. Another is the federal government that bailed out the big banks feeding the boom and had no money left to encourage job creation. And a third culprit is local governments that added a million jobs during the property-tax boom rather than banking the money and have now had to shed 500,000 of them.

In short, its the boom, stupid!

So, when does the economy kick into higher gear? When the bust is over! And that's now very close.

All that consumers need to know is that property values are no longer falling, which should happen in the next quarter. At the end of 2011, 13 percent of local markets had bottomed out; in the first quarter of 2012 is was 34 percent. I expect 50 percent once we have numbers for the second quarter, which will be in August.

We look at the employment figures for two things. How quickly jobs are increasing, because that tells us how quickly the economy is growing right now. And what kinds of jobs are increasing, because that gives us a clue about future growth. Jobs in June were up 1.3 percent from last year; that's the sluggish growth I mentioned above. But manufacturing jobs were up 2 percent, computer systems jobs up 4.3 percent, and temp services jobs up 11 percent, all good signs. Health care jobs were up 2.3 percent, restaurant jobs up 2.7 percent, good signs that the core of the economy is doing well.

Filed Under: Economy, Housing Market Tagged With: Economy, Housing Market, Real Estate Economics, Real Estate Market, US economy

About Marco Santarelli

Marco Santarelli is an investor, author, Inc. 5000 entrepreneur, and the founder of Norada Real Estate Investments – a nationwide provider of turnkey cash-flow investment property.  His mission is to help 1 million people create wealth and passive income and put them on the path to financial freedom with real estate.  He’s also the host of the top-rated podcast – Passive Real Estate Investing.

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