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 jobless claims and GDP growth.
- Two pieces of economic news for the real estate market: claims for unemployment insurance declined the week of September 22, and the Q2 GDP data shows much weaker conditions than previously estimated.
- Although the estimates are preliminary and subject to large volatility, initial claims for unemployment insurance for the week ending September 22 fell by 29,000 to 359,000 from the previous week’s revised (upward) estimate [1] . Initial claims are also significantly down from last year’s claims of about 400,000. Meanwhile, the number of insured unemployed, or those with continuing claims, was at 3.271 million as of September 15. This is also down from last year’s 3.7 million and the peak of about 6.5 million in the wake of the 2009 recession.
- In another news, the final and third estimate for Q2 GDP growth was placed at 1.3 percent. Although the economy still expanded, the expansion is much slower than in Q1′s 2.0 percent. Residential fixed investment grew 8.5 percent in Q2 [2] , also decelerating from Q1 growth of 20.5 percent. Still, residential investment has kept up the expansion which started in Q2 2011.
- Implication for REALTORS®: Growth in residential fixed investment means more housing inventory in the coming quarters, which eases up the “tight” inventory supply. Meanwhile, the number of people losing their jobs is coming down, which means more support for housing demand. The weaker GDP and continuing subpar expectations for the remainder of the year will keep the unemployment rate at or near 8 percent even though some job additions will occur at the same time.
[1] In 2012, initial claims deviated from the mean by 11,033 claims a month. So a reduction in claims of 29,000 is twice the standard deviation and can considered a huge reduction. Estimates are preliminary and subject to revisions the following month.
[2] Residential fixed construction’s contribution to the 1.3 percent GDP growth is 0.19 percent.
