Today, we look at the latest unemployment numbers and housing data.
Initial claims for unemployment fell to 406,000 last week, less than the 425,000 expected, and another pandemic-era low. Jobless claims are 78% lower than they were a year ago.
That sounds great, but aren’t claims still way above anything we saw before COVID-19?
No. While 406,000 is almost double where initial claims were just before the pandemic began, we saw numbers that high as recently as November 2012. In fact, since 1974 we have experienced 610 non-pandemic weeks where initial claims have been at least 406,000. Bet you didn’t know that!
The big question now is what the May jobs numbers will show when they are released next Friday. After April’s disappointment, I expect a big rebound in May. Half of all Americans 18 or older have now been fully vaccinated, business restrictions keep being lifted (there were 16,000 fans at the Knicks game Wednesday night), and states and the federal government are clamping down on people collecting unemployment without looking for a new job.
Companies have been desperate to find workers—so desperate that an Altamont, Illinois McDonald’s is offering free iPhones to new hires. Before you Rolling Stones fans ask, it’s not the Altamont where that disastrous free festival was held in 1969.
Bottom line is the economy continues to recover at an amazing pace, and hiring should really start to pick up in the coming months.
Since last Friday, the following bits of housing data have come out:
- Existing home sales fell for the third straight month in April.
- New home sales fell 5.9% in April, after March’s figure was revised sharply lower.
- Pending home sales fell 4.4% in April.
Ouch! What does all this mean?
We have a huge shortage of houses for sale in the United States, and prices have been rising too fast. How fast? The S&P CoreLogic Case-Shiller Index says home prices in March saw their biggest growth in over 15 years. Homebuilders cannot build new houses fast enough, especially with shortages bringing the price of materials and labor up sharply.
I’m legally obligated (not really) to point out that not all housing markets are behaving like this, so don’t just assume you can sell your home for a ridiculous amount without checking with your broker first.
Expect demand for housing to remain strong as job growth picks up. The big question is whether supply can keep up with it.