In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses unemployment insurance claims and GDP.
- After trending down for most of January, initial unemployment insurance claims for the week ending January 26 spiked by 38,000 from the previous week’s level to move up to 368,000. Notwithstanding this spike, the 4-week moving average - a better measure of trend - ended at 352,000 for the month of January, which is still lower compared to last year’s level of about 372,000.
- In related news, ADP, a company that monitors company payrolls, reported yesterday that 192,000 non-farm private sector jobs were added to the economy in January 2013, of which 15,000 jobs came from construction. The official unemployment data will be released tomorrow by the Department of Labor, but most anticipate the unemployment rate to remain essentially unchanged.
- GDP figures for the last quarter of 2012 were also released yesterday. Although the economy contracted (i.e., -0.1 percent growth) on account of cutbacks in government spending, the welcome news for REALTORS® in the report was the robust expansion of the residential sector by 15 percent.
- The direction and magnitude of future spending cuts, either by way of defaulting to a “fiscal cliff” sequestration or by measures to restrain the growth of deficit spending, remain uncertain. Under this scenario, NAR expects the economy to grow at a modest pace of 2.3 percent in 2013, which will generate 1.4 million net new non-farm payroll jobs. This pace of growth and job creation, an accommodative monetary policy environment to keep interest rates low, and improving house prices to coax an increase in inventory is expected to create 5.08 million existing home sales.