Economics, U.S. Economy

Why no jobs, explained in 1 chart (Hint, it has something to do with housing)

Back to housing. Always back to housing. From the St. Louis Fed:

Assuming that about 1 million construction jobs were lost when the real estate bubble burst, we estimate that nearly 800,000 additional jobs were lost in other industries as a consequence. Hence, the decline in construction accounts for nearly 40 percent of the total decline in employment between December 2007 and February 2010.

Real residential investment is nearly 60 percent below its peak in the fourth quarter of 2005 and 38 percent below its pre-recession level. Indeed, it has declined slightly more since the end of the recession in June 2009. Real nonresidential investment in structures (investment in commercial real estate) is 28 percent below its pre-recession level. All other components of real fixed investment are very near or significantly above their pre-recession levels.

Hence, the anemic investment in residential and commercial real estate has significantly contributed to the slow growth in employment. The problem appears to be an excess supply of real residential and commercial real estate, which will continue to impede investment in residential and commercial real estate. Unfortunately, the real supply of real estate can only adjust by depreciation, population growth (two very slow processes), or by a decline in its real value, which occurs when real estate prices decline relative to the prices of other commodities. While these adjustments take place, we expect only moderate growth rates of employment.




2 thoughts on “Why no jobs, explained in 1 chart (Hint, it has something to do with housing)

  1. This is a good explanation of why jobs aren’t coming back faster, but it ignores why non-construction job growth from 2003-07 was slower than usual. The chart seems to indicate about 20% of job growth came from construction, a sector that pre-boom/bust made up 5% of jobs. Since the 2003-07 growth was modest (8 million jobs from the trough, 5-6 million from previous high in 2000), it looks like we’ve only created about 2 million non-construction jobs net in almost a decade.

    Construction definitely isn’t helping, but there’s more to it.

  2. it seems that we are laying blame for job loss on our selves, but the majority of job loss is due to the loss of jobs that are taken from the us and placed overseas, the creation of clothes, technology, vehicles, gas, oil, customer service for all businesses etc. we buy vehicles made overseas, we buy clothes made overseas, we but technology made, service from overseas, there is nothing made in the us, there is no customer service in the us, there are no clothes made in the us, the gas you pay is created and serviced overseas, we have celebrities that go overseas to help those less fortunate but they do not help those less fortunae in thier own country yet the money they make is from thier own country, perhaps if we scale back the cost of living, food, rent, clothes, medical, we made survive. corpoerations do not look at americans for work, they look at the foreign countires for consultants from India and Japan. Pay attention American is controlled by the foreing countries and their needs. the need of the us are no longer important to those in washington. what is important now is everyting outside the us. we are in a hold and we have no vocie anylonger

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