From Keeping Current Matters
Monday July 6th, 2020 For Buyers, For Sellers, Housing Market Updates
The Bureau of Labor Statistics (BLS) released their latest Employment Situation Summary last Thursday, and it again beat analysts’ expectations in a big way. The consensus was for 3,074,000 jobs to be added in June. The report revealed that 4,800,000 jobs were added. The unemployment rate fell to 11.1% from 13.3% last month. Again, excellent news as the unemployment rate fell for the second consecutive month. However, there’s still a long way to go before the economy fully recovers as 17.8 million Americans remain unemployed.
Here are two interesting insights on the report:
What about a supposed misclassification?
The BLS addressed this at length in a blog post last week, and concluded by saying:
“Regardless of the assumptions we might make about misclassification, the trend in the unemployment rate over the period in question is the same; the rate increased in March & April and eased in May.”
They specifically noted the issue in the latest report by explaining that if they adjusted the rate for the potential miscalculation, it would increase from 11.1% to 12.1% (which is lower than the adjusted rate of 16.4% last month). They went on to say:
“However, this represents the upper bound of our estimate of misclassification and probably overstates the size of the misclassification error.”
Does the shutdown of parts of the economy skew the unemployment numbers?
Because the uniqueness of 2020 impacts the employment situation in so many ways, each jobs report is now examined with a microscope to make sure the headlines generated by the report accurately convey what’s happening in the job market.
One such analysis is done by Jed Kolko, Chief Economist at Indeed. He believes the extraordinary number of people in the “temporary” unemployed category confuses the broader issue of how many people have permanently lost their job. He adjusts for this when calculating his “core unemployment rate” (which subtracts temporary layoffs and adds unemployed who didn’t search for a job recently).
The bad news is that his analysis reveals that the number of permanently unemployed is still rising (from 4.6% in April to 5.9% last month). The good news, however, is when you use his methodology to look back at the Great Recession, today’s “core unemployment rate” is significantly lower (5.9% versus 10.5% in April 2010).
Last week’s jobs report was much better than most expected. However, we should remain cautious in our optimism. As the Wall Street Journal explained in their analysis of the jobs report:
“U.S. job growth surged last month, underscoring the economy’s capacity for a quick rebound if businesses continue to reopen and consumers regain confidence. A recent coronavirus spike, however, could undermine trends captured in the latest jobs report.”
Should We Be Looking at Unemployment Numbers Differently?
The New York Times recently ran an article regarding unemployment titled: Don’t Cheer Too Soon. Keep an Eye on the Core Jobless Rate. The piece suggests we should look at unemployment numbers somewhat differently. The author of the article, Jed Kolko, is a well-respected economist who is currently the Chief Economist at Indeed, the world’s largest online jobs site. Previously, he was Chief Economist and VP of Analytics at Trulia, the online real estate site.
Kolko suggests “the coronavirus pandemic has broken most economic charts and models, and all the numbers we regularly watch need a closer look.” He goes on to explain that the decline in the unemployment number reported by the Bureau of Labor Statistics (BLS) earlier this month was driven by a drop in temporary layoffs. If we strip those out, we’re left with what Kolko calls the core unemployment rate. Many economists have struggled with how to deal with the vast number of temporary layoffs, as a complete shutdown of the economy has never happened before. As the article states, in the last unemployment report:
“73 percent of all unemployed people said they were temporarily unemployed, which means they had a return-to-work date or they expected to return to work in six months. Before the pandemic, temporary unemployment was never more than one-quarter of total unemployment.”
The core unemployment rate handles this issue and also deals with another concern economists have discussed for years: the exclusion of the marginally attached. These are people who are available and want to work, but count as out of the labor force rather than unemployed because they haven’t searched for work in the past four weeks.
Kolko’s core rate does three things:
- Takes out temporary unemployment
- Retains the rest of the standard unemployment definition: permanent job losers, job leavers, and people returning to or entering the labor force
- Adds in the marginally attached
Removing the temporarily unemployed makes sense according to the article:
“Initial pandemic relief efforts focused on money for people to manage a temporary loss of income and funds to keep businesses afloat until they could bring their workers back. The hope and the goal is for the temporarily unemployed to return to their old jobs, rather than have them lose their jobs and have to search for new ones when jobs have become scarcer.”
The Bad News and the Good News
Clearly, the adjustments Kolko makes dramatically impact the way we look at unemployment. The bad news is, using his core rate, there was an increase in unemployment from April to May. The conventional rate reported by the BLS showed a decrease in unemployment.
The unemployment rate is a key indicator of how the economy is doing. Heading into a highly contested election this November, the BLS report releasing next week will be scrutinized like no other by members on both sides of the aisle. Mr. Kolko’s take is just one additional way to evaluate how unemployment is impacting American families.
NEXTHOME OPENS THREE OFFICES IN HOUSTON WITH THE LAUNCH OF NEXTHOME REALTY CENTER
NextHome Realty Center
Pleasanton, CA— November 3, 2016 — NextHome is proud to announce our latest addition to the franchise, NextHome Realty Center. The brokerage will feature three locations in the city of Cypress, Texas – Telge, Mueschke, and Fry.
The three offices will provide sales services in residential, luxury, farm and ranch, land, new construction, commercial and leases to the greater Houston Metro area that is home to over 6.3 million residents.
The brokerage will be owned and operated by 24-year real estate veteran broker, Gayla Skates, and her daughter, Stacie Schafer. Schafer will serve as the Director of Business Development for the offices.
After a decade of successful real estate sales under the RE/MAX franchise brand, Skates and Schafer are moving their highly successful brokerage to the NextHome franchise. With over 1,300 transactions annually, NextHome Realty Center positions the firm as one of the most productive real estate companies in the state of Texas.
Skates started her real estate career in 1992 with RE/MAX Preferred in Georgia. Skates quickly built her business and was recognized as the Rookie of the Year for the Northwest Georgia Association of REALTORS®. In the mid-2000s, Skates and her husband relocated to Cypress, Texas due to a job transfer and this is where she furthered her real estate success.
In November 2006, Skates fully made the commitment to helping other agents when she opened her own brokerage under the RE/MAX franchise model. In just under one year, Skates grew the company to over 30 producing real estate professionals
“As a broker, I have been very fortunate to attract some of the most experienced REALTORS® to create a brokerage that prides itself on customer service, integrity, and teamwork,” said Skates. “We are excited that many of our agents have decided to join us on this new journey with us.” Through this culture, the office has grown to three locations in the greater Cypress Area; serving Northwest Houston, Katy, Spring, Tomball, The Woodlands, and other surrounding communities.”
With over 16 years in the mortgage industry, Schafer joined the company in June of 2015 to assist in the growth of the company. As the company recruiter, Schafer brought on board 26 agents in less than six months.
As the Director of Business Development, Schafer is set to oversee the progressive changes to the office under the NextHome brand. With an increased focus on consistency in training, agent recognition, branding, office production, and family time for the agents, Skates, and Schafer pride themselves in focusing on their agents.
“We focus on the success of each and every one of our agents,” said Schafer. “We know that by focusing on agent’s productivity, success, and overall happiness, the brokerage will be successful as well.”
NextHome Realty Center offices feature significant resources for agents such as live classes in their 1,400 square foot training facility, full access to first-class technology, and accountability and coaching by the leadership team.
Please join us in welcoming Gayla, Stacie, and the rest of the team at NextHome Realty Center to the NextHome family!
Interested in being a part of the NextHome Real Estate Franchise? Contact VP of Sales Charis Moreno at Charis@NextHome.com.