Can A Housing Comeback Save Lagging Job Numbers?
MICHEL MARTIN, HOST:
This is TELL ME MORE from NPR News. I'm Michel Martin. Coming up, Back Talk. That's where we hear what some of you have to say about some of the stories we've covered recently. That's ahead.
First, though, there's news about jobs. The Labor Department released its report for January today. Employers added 157,000 new jobs last month. Still, the unemployment rate inched up to 7.9 percent. Many economists, though, think spring could bring good news. They're hopeful that the housing market could be on its way back and that could bring with it jobs in other areas.
Here to tell us more about this, is NPR's senior business editor, Marilyn Geewax. She joins us regularly. Marilyn, welcome back. Thanks for joining us.
MARILYN GEEWAX, BYLINE: Hi, Michel.
MARTIN: So let's start with the new jobs report. Unemployment ticked up slightly, so give us a read on this.
GEEWAX: It was a medium-ish report. It wasn't great. It wasn't bad. Yes. The unemployment rate ticked up to 7.9 percent, but you know, it's been bumping around in a very narrow range for about the last six months. Basically, we're running at a little bit less than eight percent unemployment and job growth is steady, though uninspiring.
We had about 157,000 new jobs. Wish it was twice that, but you know, it continues moving upward.
MARTIN: But what about this other number that came out this week? That was the number for gross domestic product that measures the total value of goods and services that we produce in the U.S. That number dropped and that's the first time that that number has dropped since 2009. How should we read that?
GEEWAX: The headline on that looks pretty ugly, but let's stop and think about what really happened there. To understand the gross domestic product, think about it this way. It's a giant shopping cart, and in that cart, you throw in everything that we make domestically. That is, all the goods, all the services and then, every three months, the government rolls that big shopping cart up to a cash register and we get a read on how much is in there.
Well, when they added it all up this time, they found that it shrunk a little bit. Somebody took something out of our basket. Now, why did that happen? It might have just been a bad cashier. Maybe we just got a bad reading, and probably it was a little bit better than what we thought, but there's no question that the economy did slow down in October, November, December. Those three months weren't great and the reasons for that? A lot of them, but mostly, it was Congress, this idea that we were facing this big fiscal cliff, as we called it. There was a lot of uncertainty. The defense industry pulled back dramatically. They didn't know what was going to happen with their budgets.
We also had weird things that happened, Hurricane Sandy and various disruptions. So the economy seems to have slowed a great deal towards the end of the year. But there's a lot in there that actually - if you root around in that shopping cart and you look at what all have we got in there, there are reasons why you should be optimistic, probably, for spring.
MARTIN: OK. Well, let's hear about that.
GEEWAX: OK. Well, why am I happy about my shopping cart? Because a lot of what we're buying in there are things like lots to build houses on. People are getting ready for what looks like - it may be a very good spring for housing starts. Now, we've had a terrible housing market for - oh, years. Since 2006, really, it started turning down and it's been horrible. But we've seen a real turnaround, and evidence of that showed up even in this latest jobs report.
We see that construction companies added about 28,000 jobs. Now, we're still far below where we were a few years ago in construction, but it's coming back. There's been a lot of jobs added. Almost 300,000 jobs in the past year or two and we're getting back to where you feel like there's momentum there and that will pick up through the spring.
MARTIN: Well, you can see where there's probably pent up demand in the housing area, just because we've been hearing about people consolidating their households, for example...
MARTIN: ...because of job loss. We hear about young people, instead of going out, you know, after college and moving into their own place, moving back in with parents in order to save resources and things of that. So you can understand why there's kind of pent up demand.
MARTIN: But we also keep hearing that there's a lot of housing inventory out there that hasn't moved because of the recession. So what's the source of the optimism that...
GEEWAX: Well, here's the crazy thing about - time marches on. As time passed, a lot of those people who were - a few years ago, they were 24-year-olds sleeping in Mom's basement. Now, they're 30. They want to get married. They want to have kids. They're moving on. One way or the other, they've saved enough money by living at home. There really were a lot of families that doubled up. That really did happen. It was statistically significant.
So you've had a lot of people who saved money by doubling up, and now they have enough money for a down payment and they want to start to move on. There are also people who have aged out of the house that they lived in - Baby Boomers who want to move to a condo.
So there is, all of a sudden, a lot of people who, just because time has passed, are ready to move in one way or the other and we're seeing a lot of evidence that that's really happening because prices are rising. There's just no question. You know, usually, economists sort of argue with each other and there's the one hand and there's the other hand. Right now, there is a consensus among economists. Everyone agrees that the housing market is strengthening. Prices are rising. There are more homes being built.
And, on this question of inventory, this comes back again to the idea of time marches on. Houses that were vacant because of foreclosures three and four and five years ago - frankly, they're ruined. There's sort of a lot of tear-downs out there where inventory is sort of going away because the houses just aren't suitable any more. So people are coming into neighborhoods, scraping down those old vacant houses and building new ones.
So we're starting to see much more demand for new homes and new homes spin off lots and lots of jobs. You have landscapers, and roofers, and electricians and all sorts of people get involved when new homes are being built. So there's a lot of reason to believe that, in coming months, that economic driver of new homes is going to start to perk up.
MARTIN: Well, that is a hopeful note on which to conclude today. That was NPR senior business editor Marilyn Geewax, who joins us often to talk about matters of the economy and she joined us once again from our studios in Washington, D.C.
Marilyn, thank you.
GEEWAX: You're welcome, Michel.