| Employment Grows (In Spite of Housing Bust) |
| Written by Bill Russell | |
| 06.16.2008 | |
|
Discuss this article on the forums. (0 posts) There has been constant talk of a looming recession, which always seems to be the case in election years. As of yet, there is little economic data to support that a recession is imminent since the economy is still showing positive growth and unemployment is still historically low. Analysis often point to housing as one of the big factors weighing down the economy. The construction sector, as defined by the BLS, has shed over 275,000 jobs since its peak in October 2006. In spite of the hit resulting from the housing bust, the economy overall has still created a net of 1,253,000 jobs since the same month, as can be seen in the chart below.  In fact, the construction sector is not even the largest source of job losses. Since the construction jobs’ peak in October 2006, the manufacturing sector has lost 427,000 jobs (Chart 2). It might be tempting to argue that the housing slump caused the loss in manufacturing jobs, but that sector has been declining consistently since the 1950s, independent of the housing sector or which political party controls the government.  The big picture shows that in the last five years the US economy has lost an average of 2.4 million jobs a month, or over 144 million jobs. While that seems terrible, at the same time the US economy has created an average of 2.5 million jobs per month, for a total of about 150 million new jobs. Said another way, the US has created a net of 80,000 jobs every month, or a total of about 4.9 million net new jobs over the past five years. Sure the construction sector is down, but the US economy is an amazing system where underperforming businesses are constantly being destroyed and replaced by new ones. I find it remarkable, given that the current housing downturn is probably the worst we have seen in terms of home price and permit declines, that the US economy has kept moving forward, creating more than enough jobs in other sectors to make up for the weakness in housing. 
We're always looking for feedback from our readers.
|
| < Prev | Next > |
|---|
