The economic outlook is especially precarious. Employment in some of the most predictive leading sectors—like credit intermediation and real estate agents—have turned down sharply. The entire real estate complex is at risk, even if those further downwind—like property managers, providers of building services, and architects—are not yet feeling the chill.
Job creation has come to a standstill. The unemployment rate, especially for recent graduates, is rising.
Will this turn into a full-blown recession? Answering that question is especially challenging these days, for two reasons.
First, the typical signals we would use to gauge the likelihood of a downturn are muddier than usual because of lingering pandemic distortions (volatile business formation and immigration, for example).
Second, some critical economic data is being delayed because of the government shutdown. Reading between the lines from the economic data that has not been affected by the shutdown, like ADP payrolls (a private sector alternate measure to nonfarm payrolls)—the picture is fairly grim.
Given these risks, smart housing market participants are spending more time looking in more detail at employment statistics (even if they are delayed). After all, the labor market provides some of the earliest and most reliable indicators of impending economic weakness.
At Home Economics we have also turned our focus to the jobs market:
- We published a tool—JobsWatch—that lets users see the latest jobs numbers by granular sector
- We hosted a guest article by architect and mass timber expert Kristin Slavin, about the urban myth that real estate weakness starts with architects (her argument is substantiated by our analysis below)
This article asks and answers 2 questions that should be top of mind for real estate agents, developers, builders, and investors:
1. Which pockets of the real estate world—from roofing contractors to real estate agents to home furnishing merchant wholesalers—tend to turn down first?
2. How do those sectors look today?
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