A Nation of Part-Time Renters
Amidst all the talk of an economic recovery that is supposed to kick into high gear right about now, the truth is that we’re becoming a nation of part-time workers that are just finding it harder to afford the purchase of a single family home.
There has been a lot of fanfare in the past few months about a rebound in the labor market. However, it may come as a shock to those who enjoy portraying the notion that debt and money printing saved the world, that aggregate hours worked has remained unchanged since May. This means even though non-farm payrolls have increased around 195k in each of the last few months, the actual output of labor hours hasn’t improved at all. Therefore, we can describe the labor market as one that is reducing the hours of full-time employees and hiring a concentrated amount of part-time workers. Couple that with the lack of productivity in the economy, averaging zero percent annualized growth in the last four quarters, and you get an economy that’s simply stuck in neutral.
Consumers have been burdened with a lack of real income growth as well. Perhaps this is why the home-building sector chose in July to erect an increase of 26% multi-family dwellings, as opposed to a reduction of 2.2% in single-family homes.
This great country should be able to do better than producing a nation of part-time renters.
But I guess after nearly five years of ZIRP and QE, this is the best the Fed can do. Why anyone thought more debt and inflation would save us is beyond me. And now that Bernanke has finally threatened to remove his money-printing crutch, interest rates have started to climb significantly. It can’t be much of a mystery what the rise in rates will do to housing, stocks, employment and the economy. So I have to wonder how much longer the Fed will keep watching, as a rising cost of money delivers s a crushing blow to an economy that is already on life support.
My suggestion for the Fed and D.C. is to admit your failures and let the free markets work it all out. We all will be far better off in the long run. But I doubt I’ll get my wish.