What Omicron, the bond market and jobs mean for housing


When the figures are adjusted for men and women aged 20 and over, the unemployment rate is 4%.

The U6 unemployment rate, which has historically been used by bearish Americans to say the job market is not great, is currently lower than what we were seeing in the best levels before the Great Financial Crisis. Basically it’s very rare that this row of data is less than 8%, but we got there today. My best advice is to ignore people who are using this row of data out of context. Currently, it is located at 7.8% and near the levels we saw just before COVID-19 hit us.

During this recovery, one of the big themes of my job and labor market analysis was that job vacancies should reach ten million more. I had tweeted the phrase #JOLTS 10,000,000 long before the job posting data took off in that direction. Unlike other people, I don’t believe in the conspiracy theories that many Americans haven’t worked since 1945 but were able to feed themselves, buy or rent shelter, and buy clothes.

Like much of my economic work, there are limits to what can be done due to slowing population growth and the fact that no country has a Dorian Gray labor market: death and aging are powerful economic forces that cannot be changed. In the end, nature always wins, and no one can live or work forever.

As you can see below the trend is your friend and the vacancies were close. 7 million before COVID-19 hits us. Every month, baby boomers get older and some leave the workforce for good. However, we have parts of America that lack labor force growth in the prime of life, so the young replacing the old are not uniform across all regions.

That said, employment data from the household survey showed employment gains of over one million jobs. We have enough workforce to return to pre-COVID-19 levels and I expect to see significant positive revisions to employment data over time this year. I counted the months to see if my forecast would be correct.

With 10 months to go until the end of September 2022, let’s see how much progress we need.

  • February 2020: 152,553,000 works
  • Today: 148,611,000 works
  • it leaves 3,942,000 jobs to be gained over the next 10 months, which is 394,200 jobs per month. With an unemployment rate of 4.2%!

Here’s a look at the job gains and losses reported today. It should be noted, as you can see below, that this is an excellent report on the growth of construction employment. Let’s not forget that the manufacturer’s confidence data has increased lately.

Keep in mind that when looking at employment data, it is always the prime-age labor force data for 25-54 year olds. The percentage of employment to population for the prime working population is 1.9% far from back to February 2020 levels. The recovery in employment in this new expansion has been much better than what we have seen during the recovery phase after the great financial crisis.

Most of the people who want to work in our country are employed on a regular basis. It is not surprising that the lower part of the population with an education and skill level tends to have a higher unemployment rate. That’s why I created the #ATighterLaborMarketIsAGoodThing. We want to see the kind of unemployment rate that college graduates have spread to other industries!

In this report, we found a significant drop in the unemployment rate for those who never completed high school. This group of Americans, while not making up a large portion of the workforce, are typically the last group to be hired in an expansion. The decline in the unemployment rate for this group has been significant, as the previous report places them at a low 7.4% unemployment.

Here’s a breakdown of the unemployment rate and educational attainment of those 25 and over.

  • Less than a high school diploma, 5.7%
  • High school graduate, no college 5.2%
  • A college or associate degree 3.7%
  • Baccalaureate and higher 2.3%

We can afford to keep job data for a period of time. However, we are now in our fifth wave of increasing COVID-19 cases with a new variant called Omicron, which is already present in 38 countries. So what will this do for mortgage rates, the economy and the bond market? While the Delta variant hasn’t crushed economic data like COVID-19 did in March and April 2020, it has slowed down some aspects of the economy. So if Omicron is worse than Delta, we have to add this new variable into the equation for 2022. Regarding the bond market and the prime fed rising rates is a whole different story.

When I wrote the AB recovery model on April 7, 2020 (which was retired on December 9, 2020), I needed something to happen in 2021. While I thought we needed to see the return at 10 n return to 1% in 2020, the real goal was to create a range between 1.33% – 1.60%. It couldn’t have happened last year, but it was a must see for this year.

Even with talks about the Fed’s first rate hike and cut, a boom in economic growth and high inflation, the 10-year yield is currently 1.36%. I recently spoke about mortgage rates, bond yields, and Omicron’s impact on these factors in a new podcast, The summary, with editor Sarah Wheeler.

One thing I notice about this expansion is that we are no longer at the beginning of an economic expansion. With an unemployment rate of 4.2% and a higher 2-year yield 0.56%, my first red flag of recession is raised!

Now that doesn’t mean a recession is about to happen, but my job has always been to connect the dots between economic expansion and recession. In the previous expansion, I raised my first red flag of recession when the unemployment rate was 4.9%. My second red flag will be when the Federal Reserve hikes rates.

These are relatively low-level risks and occur at a later stage of the economic recovery than we are today. The economy is on fire and the job market is tighter than you might think. Retail sales figures are a prime example of current economic data in America. These numbers deviated from historical norms in the most significant way I have ever seen in my life and did not show the moderation I expected.

For HousingWire HW + readers, I’ll be doing an update on the health of the business cycle after each jobs report, following the business cycle in more depth with my red flag model of recession now that we’re at this. stage of economic expansion. I recently wrote about what to look for when housing and the economy are really showing weakness. For me personally, this is where the fun of tracking economic data occurs and where again, the real economic data ball players show their game. data at a time.


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