Housing and Manufacturing Lead the Economic Recovery
- Author: Jessica Williams
- Posted: 2023-09-19
Thursday, January 21 — the Department of Labor's jobs report finds that fewer Americans filed for unemployment compensation over the past week.
The COVID-19 pandemic continues to infect hundreds of thousands of Americans every day.
It has ravaged entire industries, but has mostly helped both housing and manufacturing.
These two sectors seem to be holding the economy together overall, but the recovery is perilous.
Housing Remains Strong
New housing starts and permits for future single-family homes grew in December.
According to the January 21 report, new housing starts were higher last month than they were since December 2006.
Manufacturing is also strong.
American manufacturers reported a big boost in new orders in the past month.
Which Sectors Are Faltering
The service sectors of the economy have been dealt the hardest blow of the COVID-19 pandemic.
This has resulted in serious financial consequences to low-wage earners.
The recovery is K-shaped, explains some economists.
Better-paid workers are doing well as the pandemic continues.
Lower-paid workers are losing out on the gains they made in the recovery thus far.
In fact, President Biden's two biggest challenges during the first 100 days of his presidency seems to be:
- the economic recovery; and
- the quashing of the pandemic.
Why the Housing Market Is Strong
There are several reasons why the housing market is going through a big boom.
- Low interest rates.
The Federal Reserve has set the interest rate to 0 or near 0 for more than two years.
- People want more space.
As people stay home to work or go to school, they need more space. People who have been working and/or studying from home also want a dedicated work or learning space in order to be productive.
Many also want to relocate out of congested areas like cities, hoping to have yards to enjoy. With limits on travel, staycations in a nice backyard are a safe and healthy alternative.
- Renters were able to save up.
Especially those who work in industries that weren't adversely affected by the closures. Saving more allows these people to put more money down on the home.
- People are engaging in more additions, remodeling, and upgrades of their homes.
The inventory has ranged from just one to three months in most of the country.
A stable housing market usually has a six-month supply of available existing and new homes for sale.
Housing Is the Economy's Foundation Right Now
Housing starts are growing. This growth is keeping people employed.
The pandemic has also inspired people to improve, upgrade, and upsize their living arrangements.
That has led to more sales of:
- home decor
- furniture
- paint
- appliances
Craftspeople and tradesfolk are also seeing an increase in demand for services.
This means that housing is driving a boost in the demand for:
- home service providers
- including electricians
- carpenters
- plumbers
- masons
- other similar professionals
Housing Market Is Expected to Remain Strong
Economists expect the housing market to remain strong and have a fast rate of growth at least through the second quarter of 2021.
The market may slow its growth rate for the third and fourth quarters of the year, but it is unlikely to have any negative growth.
This means that those in:
- construction
- supply
- specialty trades
- surveying
- inspections
- permitting
