Welcome back after the holiday weekend and the start of the second half of the year. Last week left us with the June employment report that was better than expected, again making initial headlines. Businesses added 288k jobs in June, the 3rd month in a row with strong job growth, with the unemployment rate dropping to 6.1%. After the dust settled, the take away from this is still the same. The jobs being created are not great jobs, many of which are part time, and the labor participation rate remains low at 62.8%. Employment is increasing but the dollars earned in many of the jobs are not enough to increase discretionary spending. At the same time businesses are doing well and stock indexes are setting new all time highs. The fact is that businesses are able to do more with less people thanks to new technologies. Eventually this is going to have to sink in. If you’re curios what the founders of Google think about the future of the job market check this out.
So what does this all mean? Both the stock market and interest rates have been improving along side each other, something we don’t usually see. Add to the mix International concerns in the Middle East and you get Interest rates hovering around 12 month lows. We’ll take that. This is great news for the housing market if you need a loan, but what we really need is better jobs for the next generation of home owners, the 20 somethings where the labor participation rate is at record lows. This group is having trouble finding work and deciding to stay in school longer and taking on massive student debt instead. It will be interesting to see what happens in the housing market once this group can get meaningful employment and become buyers. If you are in the market to buy now we have been gifted another round of low interest rates and decent home inventory, so sellers should be more willing to deal. This could be a great time to be a buyer.
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