What does a jobless recovery mean for the housing market?
by Tom on July 14, 2009
in Market Musings, house prices
If you’ve been reading Straight Talk for a while, first off, I want to say thank you. I appreciate it more than you probably will ever realize.
Secondly, you know that I’ve been saying that the key to the turnaround in the housing market and the overall economy is jobs. Unless we have a true recovery in the job market, we are going to see starts and stops and ups and downs but we won’t see an across the board recovery in the housing market.
Thirdly, you can probably infer, from what I’ve written in the past, that I think more highly of Fed Chairman Ben Bernanke than I have either the past Treasury Secretary (Paulson) or the current one (Geithner).
So, when Fed Chairman Bernanke says in a meeting with Congressional officials that this could be a jobless recovery, I say, “Gulp.”
What does that mean? A couple of possible thoughts:
- No one is going to see the days of 10% plus appreciation in housing any time soon. From 2000 to 2005, my brother made more in appreciation than he did in salary. From 2006 to 2009, he lost WAY more in appreciation/depreciation than he made in income.
- We’ll see signs of stabilization in some markets, signs of things still deteriorating in other markets, some good months in some markets and then some bad months. It’s going to be a two steps forward, one step back kind of thing, oh and then two steps back, one step forward, and then marching in place. When you look at things in the rearview mirror, they’ll look a little better going forward than they were in the background.
In other words, the data is going to be inconclusive and inconsistent and it’s going to take time…..
Tom Vanderwell
Federal Reserve Chairman Ben Bernanke sees the possibility of continued high unemployment even after the recession eases, a key Republican lawmaker who met with the Fed chief told CNBC.“It was a rather sobering meeting,” Sen. Richard Shelby, an Alabama Republican, said in a live interview. “I said…’Could this be a jobless recovery?’…and he said it could be,” Shelby said.
Bernanke has predicted the recession will end this year, with many economists forecasting that the economy will start to grow again as soon as the current July-September quarter.
But Bernanke’s comment that unemployment could remain high for some time appeared to be more pessimistic than any of his recent public statements.
