Latest Unemployment Report: Great News…for the Most Part

Latest Unemployment Report: Great News…for the Most Part | MyKCM

The Bureau of Labor Statistics (BLS) released their latest Employment Situation Summary last Thursday, and it again beat analysts’ expectations in a big way. The consensus was for 3,074,000 jobs to be added in June. The report revealed that 4,800,000 jobs were added. The unemployment rate fell to 11.1% from 13.3% last month. Again, excellent news as the unemployment rate fell for the second consecutive month. However, there’s still a long way to go before the economy fully recovers as 17.8 million Americans remain unemployed.

Here are two interesting insights on the report:

What about a supposed misclassification?

The BLS addressed this at length in a blog post last week, and concluded by saying:

“Regardless of the assumptions we might make about misclassification, the trend in the unemployment rate over the period in question is the same; the rate increased in March & April and eased in May.”

They specifically noted the issue in the latest report by explaining that if they adjusted the rate for the potential miscalculation, it would increase from 11.1% to 12.1% (which is lower than the adjusted rate of 16.4% last month). They went on to say:

“However, this represents the upper bound of our estimate of misclassification and probably overstates the size of the misclassification error.”

Does the shutdown of parts of the economy skew the unemployment numbers?

Because the uniqueness of 2020 impacts the employment situation in so many ways, each jobs report is now examined with a microscope to make sure the headlines generated by the report accurately convey what’s happening in the job market.

One such analysis is done by Jed Kolko, Chief Economist at Indeed. He believes the extraordinary number of people in the “temporary” unemployed category confuses the broader issue of how many people have permanently lost their job. He adjusts for this when calculating his “core unemployment rate” (which subtracts temporary layoffs and adds unemployed who didn’t search for a job recently).

The bad news is that his analysis reveals that the number of permanently unemployed is still rising (from 4.6% in April to 5.9% last month). The good news, however, is when you use his methodology to look back at the Great Recession, today’s “core unemployment rate” is significantly lower (5.9% versus 10.5% in April 2010).

Bottom Line

Last week’s jobs report was much better than most expected. However, we should remain cautious in our optimism. As the Wall Street Journal explained in their analysis of the jobs report:

“U.S. job growth surged last month, underscoring the economy’s capacity for a quick rebound if businesses continue to reopen and consumers regain confidence. A recent coronavirus spike, however, could undermine trends captured in the latest jobs report.”

Posted on July 6, 2020 at 10:35 am
Desiree Stanley | Category: Economy, Unemployment | Tagged , , , , , , ,

A Historic Rebound for the Housing Market

A Historic Rebound for the Housing Market | MyKCM

Pending Home Sales increased by 44.3% in May, registering the highest month-over-month gain in the index since the National Association of Realtors (NAR) started tracking this metric in January 2001. So, what exactly are pending home sales, and why is this rebound so important?

According to NAR, the Pending Home Sales Index (PHS) is:

“A leading indicator of housing activity, measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. Because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing-Home Sales by a month or two.”

In real estate, pending home sales is a key indicator in determining the strength of the housing market. As mentioned before, it measures how many existing homes went into contract in a specific month. When a buyer goes through the steps to purchase a home, the final one is the closing. On average, that happens about two months after the contract is signed, depending on how fast or slow the process takes in each state.

Why is this rebound important?

With the COVID-19 pandemic and a shutdown of the economy, we saw a steep two-month decline in the number of houses that went into contract. In May, however, that number increased dramatically (See graph below):A Historic Rebound for the Housing Market | MyKCM This jump means buyers are back in the market and purchasing homes right now. Lawrence Yun, Chief Economist at NAR mentioned:

“This has been a spectacular recovery for contract signings and goes to show the resiliency of American consumers and their evergreen desire for homeownership…This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”

But in order to continue with this trend, we need more houses for sale on the market. Yun continues to say:

“More listings are continuously appearing as the economy reopens, helping with inventory choices…Still, more home construction is needed to counter the persistent underproduction of homes over the past decade.”

As we move through the year, we’ll see an increase in the number of houses being built. This will help combat a small portion of the inventory deficit. The lack of overall inventory, however, is still a challenge, and it is creating an opportunity for homeowners who are ready to sell. As the graph below shows, during the last 12 months, the supply of homes for sale has been decreasing year-over-year and is not keeping up with the demand from homebuyers.A Historic Rebound for the Housing Market | MyKCM

Bottom Line

If you decided not to sell this spring due to the health crisis, maybe it’s time to jump back into the market while buyers are actively looking for homes. Let’s connect today to determine your best move forward.

Posted on July 1, 2020 at 10:55 am
Desiree Stanley | Category: Real Estate | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Are New Homes Going to Be Available to Buy This Year?

Are New Homes Going to Be Available to Buy This Year? | MyKCM

In today’s economy, everyone seems to be searching for signs that a recovery is coming soon. Many experts agree that it may actually already be in motion or will be starting by the 3rd quarter of this year. With the housing market positioned to lead the way out of this recession, builder confidence might be a bright spark that gets the recovery fire started. The construction of new homes coming right around the corner is a huge part of that effort, and it may drive your opportunity to make a move this year.

According to the National Association of Home Builders (NAHB): 

“New home sales jumped in May, as housing demand was supported by low interest rates, a renewed household focus on housing, and rising demand in lower-density markets. Census and HUD estimated new home sales in May at a 676,000 seasonally adjusted annual pace, a 17% gain over April.” 

In addition, builder confidence is also rising, opening up opportunities for newly constructed homes in the market. The NAHB also notes:

“In a sign that housing stands poised to lead a post-pandemic economic recovery, builder confidence in the market for newly-built single-family homes jumped 21 points to 58 in June, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Any reading above 50 indicates a positive market.”

As noted above, this upward trend is supported by builders reporting an increase in demand for single-family homes in suburban neighborhoods with lower-density populations, a result of the COVID-19 health crisis.

Moreover, the most recent Monthly New Residential Construction Report from the U.S. Census indicates that authorized building permits for new residential construction increased by 14.4% month-over-month from April to May, and housing starts were also up 4.3% over the same time period. (See graph below):Are New Homes Going to Be Available to Buy This Year? | MyKCM Although housing permits and starts are both considerably lower than they were at this time last year, indicating the new construction market is still working on building its way back up, the trends are moving in the right direction when it comes to having an impact on the U.S. economy. They’re also poised to create the much-needed new homes for Americans to purchase in a time when inventory is so scarce.

Dean Mon, Chairman of the NAHB notes:

“As the nation reopens, housing is well-positioned to lead the economy forward…Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising. And buyer traffic more than doubled in one month even as builders report growing online and phone inquiries stemming from the outbreak.”

The gap between homes to buy and the high demand from purchasers may be narrowed by new construction, and the data shows that these homes are on their way into the housing market.

So, if you’ve debated whether or not to sell your house this year because you’re not sure where to move, a newly-built home – designed to your specific liking – may be your answer.

Bottom Line

With new residential construction right around the corner, you can feel confident about selling your house and having a place to move into. Maybe it’s time to finally design the home you’ve always wanted. Let’s connect today to discuss selling your house while demand from eager buyers is high.

Posted on June 30, 2020 at 9:56 am
Desiree Stanley | Category: Economy, Real Estate | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Is the Economic Recovery Already Underway?

Is the Economic Recovery Already Underway? | MyKCM

The Wall Street Journal just released its latest monthly Survey of Economists. In an article on the findings, they reported:

“The U.S. economy will be in recovery by the third quarter of this year, economists said in a survey that also concluded the labor market will fare better than previously expected following the effects of the coronavirus pandemic.”

Clearly, the latest jobs report from the U.S. Bureau of Labor Statistics confirmed the labor market is outperforming expectations, as it revealed that 2.5 million jobs were added. Directly before the release, experts forecasted that we would lose over 8 million jobs.

A second revelation indicating the economy is already about to turn around was also somewhat unexpected. More than 9 out of 10 economists surveyed believe the recovery has already begun this quarter or will begin in the third quarter. Here are the results of the survey question asking when the recovery will begin:Is the Economic Recovery Already Underway? | MyKCM The survey also asked what type of recovery the economists expect.

More than 8 out of 10 believe it will be a form of a ‘V’ recovery:

  • A true ‘V’ with a sharp drop and a sharp rebound
  • A ‘Nike Swoosh’ with a sharp drop and a more gradual recovery, coined after the company’s logo

Some experts, possibly concerned about a second wave of COVID-19, call for a ‘W’ recovery – a double-dip recession.

Others call for a ‘U’ with a prolonged bottom.

A very small percentage project the dreaded ‘L’ recovery, which is no recovery at all for the foreseeable future (think of the Great Recession).

Here’s the breakdown:Is the Economic Recovery Already Underway? | MyKCM

Bottom Line

Though we still have a long and difficult journey ahead, it appears the worst for both the economy and the unemployment situation may be in our rearview mirror.

Posted on June 16, 2020 at 8:29 am
Desiree Stanley | Category: Economy | Tagged , , , , ,

Real Estate Tops Best Investment Poll for 7th Year Running

Real Estate Tops Best Investment Poll for 7th Year Running | MyKCM

Every year, Gallup conducts a survey of Americans to determine their choice for the best long-term investment. Respondents are asked to select real estate, stocks/mutual funds, gold, savings accounts/CDs, or bonds.

For the seventh year in a row, real estate has come out on top as the best long-term investment. Gallup explained:

“Real estate remains the most favored investment to Americans, as has been the case since 2013, when the housing market was on the rebound. More than a third of Americans have named real estate as the top investment since 2016.”

This year’s results indicated 35% of Americans chose real estate, followed by stocks at 21%. The full results covering the last decade are shown in the chart below:Real Estate Tops Best Investment Poll for 7th Year Running | MyKCM

Bottom Line

The belief of the American people in the stability of housing as a long-term investment remains strong, even through the many challenges our economy faces today.

Posted on June 15, 2020 at 9:05 am
Desiree Stanley | Category: Economy, Real Estate | Tagged , , , , , , , , , , , , , , , , , , , , , , ,

The Shocking News in the Unemployment Report

Last Friday, the U.S. Bureau of Labor Statistics released their May Employment Situation SummaryLeading up to the release, most experts predicted the unemployment rate would jump up to approximately 20% from the 14.7% rate announced last month.

The experts were shocked.

The Wall Street Journal put it this way:

“The May U.S. jobless rate fell to 13.3% and employers added 2.5 million jobs, blowing Wall Street expectations out of the water: Economists had forecast a loss of 8.3 million jobs and a 19.5% unemployment rate.”

In addition, CNBC revealed:

“The May gain was by far the biggest one-month jobs surge in U.S. history since at least 1939.”

Here are some of the job gains by sector:

  • Food Service and Bartenders – 1,400,000
  • Construction – 464,000
  • Education and Health Services – 424,000
  • Retail – 368,000
  • Other Services – 272,000
  • Manufacturing – 225,000
  • Professional Services – 127,000

There’s still a long way to go before the economy fully recovers, as 21 million Americans remain unemployed. That number is down, however, from 23 million just last month. And, of the 21 million in the current report, 73% feel their layoff is temporary. This aligns with a recent Federal Reserve Bank report that showed employers felt 75% of the job losses are temporary layoffs and furloughs.

The Employment Situation Summary was definitely a pleasant surprise, and evidence that the country’s economic turnaround is underway. The data also offers a labor-market snapshot from mid-May, when the government conducted its monthly survey of households and businesses. Many states did not open for business until the second half of May. This bodes well for next month’s jobs report.

Bottom Line

We cannot rejoice over a report that reveals millions of American families are still without work. We can, however, feel relieved that we are headed in the right direction, and much more quickly than most anticipated.

Note: In its original report, the BLS explained that a misclassification error could have occurred over the last 3 months, starting in March of 2020. Readjusting for this error, the unemployment rate would actually show a drop from 19.7% in April to 16.3% in May. Nobody would say the original report of 13.3% unemployment was a good number, nor is the revised 16.3%. What is a positive move for our country and the economy is the significant drop in the rate from April to May, meaning more people are getting jobs than losing them. That’s the key takeaway.

Posted on June 9, 2020 at 8:56 am
Desiree Stanley | Category: Economy, Real Estate, Unemployment | Tagged , , , , , , , , , , , , , ,

Economists Forecast Recovery to Begin in the Second Half of 2020

Economists Forecast Recovery to Begin in the Second Half of 2020 | MyKCM

With the U.S. economy on everyone’s minds right now, questions about the country’s financial outlook continue to come up daily. The one that seems to keep rising to the top is: when will the economy begin to recoverWhile no one knows exactly how a rebound will play out, expert economists around the country are becoming more aligned on when the recovery will begin.

According to the latest Wall Street Journal Economic Forecasting Survey, which polls more than 60 economists on a monthly basis, 85.3% believe a recovery will begin in the second half of 2020 (see graph below):Economists Forecast Recovery to Begin in the Second Half of 2020 | MyKCM There seems to be a growing consensus among these experts that the second half of this year will be the start of a turnaround in this country.

Chris Hyzy, Chief Investment Officer for Merrill notes:

“We fully expect the economy could begin to pick up in late June and July with a strong recovery in the fourth quarter.” 

In addition, five of the major financial institutions are also forecasting positive GDP in the second half of the year. Today, four of the five expect a recovery to begin in the third quarter of 2020, and all five agree a recovery should start by the fourth quarter (see graph below):Economists Forecast Recovery to Begin in the Second Half of 2020 | MyKCM

Bottom Line

The vast majority of economists, analysts, and financial institutions are in unison, indicating an economic recovery should begin in the second half of 2020. Agreement among these leading experts is stronger than ever.

Posted on May 28, 2020 at 8:23 am
Desiree Stanley | Category: Economy | Tagged , , , , , ,

Experts Predict Economic Recovery Should Begin in the Second Half of the Year

Experts Predict Economic Recovery Should Begin in the Second Half of the Year | MyKCM

One of the biggest questions we all seem to be asking these days is: When are we going to start to see an economic recovery? As the country begins to slowly reopen, moving forward in strategic phases, business activity will help bring our nation back to life. Many economists indicate a recovery should begin to happen in the second half of this year. Here’s a look at what some of the experts have to say.

Jerome Powell, Federal Reserve Chairman

“I think there’s a good chance that there’ll be positive growth in the third quarter. And I think it’s a reasonable expectation that there’ll be growth in the second half of the year…

So, in the long run, I would say the U.S. economy will recover. We’ll get back to the place we were in February; we’ll get to an even better place than that. I’m highly confident of that. And it won’t take that long to get there.”

Nonpartisan Analysis for the U.S Congress

“The economy is expected to begin recovering during the second half of 2020 as concerns about the pandemic diminish and as state and local governments ease stay-at-home orders, bans on public gatherings, and other measures. The labor market is projected to materially improve after the third quarter; hiring will rebound and job losses will drop significantly as the degree of social distancing diminishes.”

Neel Kashkari, President, Minneapolis Federal Reserve Bank

“I think we need to prepare for a more gradual recovery while we hope for that quicker rebound.”

We’re certainly not out of the woods yet, but clearly many experts anticipate we’ll see a recovery starting this year. It may be a bumpy ride for the next few months, but most agree that a turnaround will begin sooner rather than later.

During the planned shutdown, as the economic slowdown pressed pause on the nation, many potential buyers and sellers put their real estate plans on hold. That time coincided with the traditionally busy spring real estate season. As we look ahead at this economic recovery and we begin to emerge back into our communities over the coming weeks and months, perhaps it’s time to think about putting your real estate plans back into play.

Bottom Line

The experts note a turnaround is on the horizon, starting as early as later this year. If you paused your 2020 real estate plans, let’s connect today to determine how you can re-engage in the process as the country reopens and the economy begins a much-anticipated rebound.

Posted on May 21, 2020 at 9:07 am
Desiree Stanley | Category: Real Estate | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , ,

A Day When Americans Can Return to Work [INFOGRAPHIC]

A Day When Americans Can Return to Work [INFOGRAPHIC] | MyKCM

Some Highlights

  • Taking a moment to reflect upon what we’ve heard from historical leaders can teach us a lot about getting through the many challenges we face today.
  • We’re all eager for the day when every American can safely return to work. That day is coming. Timing is everything. Patience is essential.
  • Our courage, strength, and unparalleled resilience will get us there.
Posted on May 11, 2020 at 9:14 am
Desiree Stanley | Category: Real Estate, Unemployment | Tagged , , , , , , , , , ,

Confused About the Economic Recovery? Here’s Why.

Confused About the Economic Recovery? Here’s Why. | MyKCM

As we continue to work through the health crisis that plagues this country, more and more conversations are turning to economic recovery. While we look for signs that we’ve reached a plateau in cases of COVID-19, the concern and fear of what will happen as businesses open up again is on all of our minds. This causes confusion about what an economic recovery will look like. With this in mind, it’s important to understand how economists are using three types of sciences to formulate their forecasts and to work toward clearer answers.

  1. Business Science – How has the economy rebounded from similar slowdowns in the past?
  2. Health Science – When will COVID-19 be under control? Will there be another flareup of the virus this fall?
  3. People Science – After businesses are fully operational, how long will it take American consumers to return to normal consumption patterns? (Ex: going to the movies, attending a sporting event, or flying).

Sam Khater, Chief Economist at Freddie Mac, says:

“Although the uncertainty of the crisis means forecasts of economic activity are more unclear than usual, we expect that most of the economic damage from the virus will be contained to the first half of the year. Going forward, we should see a recovery starting in the second half of 2020.”

This past week, the Bureau of Economic Analysis released the advanced estimate for Gross Domestic Product (GDP) for the first quarter of 2020. That estimate came in at -4.8%. It was a clear indicator showing how the U.S. economy slowed as businesses shut down and consumers retreated to their homes in fear of the health crisis and of contracting COVID-19.Confused About the Economic Recovery? Here’s Why. | MyKCM Experts agree that the second quarter of 2020 will be an even greater slowdown, a sign more businesses are feeling the effects of this health crisis. The same experts, however, project businesses will rebound, and a recovery will start to happen in the second half of this year.

Bottom Line

As time goes on, we’ll have more clarity around what the true economic recovery will look like, and we’ll have more information on the sciences that will affect it. As the nation’s economy comes back to life and businesses embrace new waves of innovation to serve their customers, the American spirit of grit, growth, and prosperity will be alive and well.

Posted on May 5, 2020 at 9:05 am
Desiree Stanley | Category: Real Estate | Tagged , , , , , , , , , , , , , , , , , , , , , , , ,