NYT: As the McMansions Go, So Goes Job Growth

[DeepModem Mom]

As the McMansions Go, So Goes Job Growth
By DANIEL GROSS
Published: November 20, 2005


THERE'S a growing consensus that the housing market is cooling off. This month, Toll Brothers, the luxury home builder, warned that sales of McMansions were falling, and its highflying stock fell to earth. Last Thursday, the Commerce Department reported that housing starts, a reliable gauge of present activity, fell 5.6 percent in October from year-ago levels, while building permits, a reliable gauge of future activity, fell 6.7 percent.

These data points are potentially worrisome, and not only for the legions of real estate brokers and Sheetrock layers toiling in offices and job sites across the country. In recent years, economists from Alan Greenspan on down have been discussing the way rising home prices and the growth of home-equity borrowing have fueled consumer spending, the piston that drives the country's economic engine. But in recent years, housing, real estate and the related industries have become a huge factor in another crucial economic area: employment growth.

After the brief and shallow recession of 2001, the resilient United States economy stubbornly failed to create payroll jobs at the rate of past recoveries. Economists and politicians blamed factors and trends like outsourcing, global trade, high benefit costs and productivity growth. But amid the gloom, the real estate sector shouldered the burden of job creation.

Asha Bangalore, an economist at Northern Trust in Chicago, tallied figures from the Bureau of Labor Statistics for sectors like construction, building material and garden supply stores. She found that from November 2001 to October 2005, housing and real estate accounted for a whopping 36 percent of private-sector payroll job growth. "In four years, 2.3 million private-sector jobs were created in the U.S., and 836,000 were related to the housing sector," she said.

Given everything else happening in the corporate world, the housing sector was the ideal place to have an investment boom. Building, selling, decorating and renovating homes is labor intensive. And unlike much investment in the broader manufacturing sector, the money pouring into the housing industry creates demand for American labor.... If the frothy regional markets go flat or if prices simply stop rising at the rates of recent years, there will surely be wide-ranging economic effects on consumer spending and on jobs. "Housing and the job markets are joined at the hip," Mr. Zandi said. "And if housing cools, so too will hiring and the job market more broadly, particularly in the more juiced-up housing markets."...


http://www.nytimes.com/2005/11/20/business/yourmoney/20view.html

[wakeme2008]

1. Jebbie trys to tell the world how low Florida's unemployment is

But Florida is one of the states leading the way with housing and condo building.

IMHO, if that stops Florida will have a high unemployment.

[Nederland]

4. The Hurricane Season

...insured that the construction business in Florida will stay strong.

[MADem]

2. And when jobs go away, crime goes up

Time to start looking at your homes from a personal security standpoint, IMO....

[dcfirefighter]

3. Land bubbles

Henry George was one of the first to recognize that industrial depressions were caused largely by real estate speculation.

http://www.henrygeorge.org/chp1.htm