Interesting news from Freddie Mac on our economic outlook, new construction, and the impacts on our unemployment rate.
Freddie Mac (OTCQB: FMCC) released today its U.S. Economic and Housing Market Outlook for May showing that the juice for the economic recovery to accelerate is going to come from housing, specifically new home construction, which will also deliver the jobs to bring down the unemployment rate.
A short preview video and the complete May 2013 U.S. Economic and Housing Market Outlook are available here.
Outlook Highlights
- Expect GDP growth in 2013 to be about 2 to 2.5 percent, below its 3 to 3.5 percent potential.
- As of April 2013, the percent of the population participating in the labor market was at 63 percent, lower than any time since 1980.
- The relationship between the unemployment rate for construction workers and job openings has not shifted, as it apparently has for all other workers.
- Forecasting housing starts will increase by about 200,000 units in 2014 compared to 2013, which suggests the unemployment rate for construction workers should fall by around 1.5 percentage points and add 100,000 to 200,000 additional jobs in construction alone.
- As of March, the median time-on-market for new homes was 5 months, which is in line with historical averages, and down sharply from the Great Recession high of over 14 months.
Quote
Attributed to Frank Nothaft, Freddie Mac vice president and chief economist.
- “While the broader labor market might be facing a skills-match challenge, in the construction sector, it’s a matter of structures, not a structural employment problem.
- “Household formations are expected to gradually rise to a 1.2 to 1.4 million annual pace in coming years, supporting a sustained level of construction. Supplement this with replacement of existing stock and building for the second-home market housing starts should rise to 1.7 to 1.8 million dwellings by 2017. This will supply the juice to help strengthen the recovery.”
Freddie Mac compiles data on major economic, housing, and mortgage market indicators and offers forecasts based on those indicators.
Freddie Mac was established by Congress in 1970 to provide liquidity, stability, and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four home borrowers and is one of the largest sources of financing for multifamily housing.