Good News Now and Later
Good News now: Weekly initial jobless claims declined again to 348,000 for the week ending February 11, defying expectations for a modest retrenchment following recent declines. This is the lowest level in nearly four years. The welcome trend comes on the heels of other recent indicators that, taken together, paint a picture of a faster recovery in the labor market than analysts had forecast just a couple of months ago. The other indicators include the falling unemployment rate (8.3 percent in January), greater-than expected job creation (243,000 net new payroll jobs in January), and an increase in job openings (3,376,000 in December, the second-highest monthly level in 2011). The improved tone of the labor market is good news for commercial real estate because job creation fuels demand for office space, shopping centers and apartments and, more indirectly, for industrial space.
Good News later: I have worked as an analyst and economist for Grubb & Ellis during the past three recessions, and during each one, the most common question people ask is what industry will propel the next expansion. Often the question is asked with an air of resignation as if there could never be another boom like the last one. (This might actually be desirable if the last boom ended in a bursting bubble of investments gone bad, surging loan defaults, cascading layoffs and jobless recoveries, which pretty well describes the last three recessions.) If you are wondering what comes next, a recent article in The Wall Street Journal cites three mega-trends, all tied to technology, that will fuel long-term growth and wealth creation. These trends are big data, smart manufacturing and a communications revolution. The authors – a physicist and the dean of the engineering school at Northwestern University – state: “America’s success isn’t preordained. But the technological innovations circa 2012 are profound. They will engender sweeping changes to our society and our economy. All the forces are in place. It’s just a matter of when.” Click here for the full article.
Have a great weekend.
SVP, Chief Economist
Grubb & Ellis
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