by Calculated Risk on 8/17/2005 03:07:00 PM

Responding to an earlier post, Ken Melvin directs us to some comments in an article in the SF Gate: Want a Wal-Mart job? Join the crowd 11,000 apply for 400 openings at retailer's new Oakland store.

"It's not about Wal-Mart -- it's about the rest of the labor market," [Stephen Levy, an economist for the Center for Continuing Study of the California Economy] said. "If the rest of the labor market was strong, you wouldn't have 11, 000 people applying for 400 jobs."

During the dot-com boom, Levy said, businesses like Starbucks bumped up wages to recruit employees in the middle of a hot job market. But now the situation has reversed, and more people are willing to take whatever they can get.

That sure sounds like slack in the labor market.

On the same topic, MaxSpeak has another post today: Measured for Slack. This was a follow-up to the WSJ Econoblog yesterday with Dr. Altig of Macroblog discussing the labor market with MaxSpeak's Max Sawicky and Tom Walker. If you haven't already, check out the WSJ Econoblog: Debating Job-Market 'Slack'.

by Calculated Risk on 8/17/2005 11:32:00 AM

The WSJ covers housing today:

How Will Home Boom End? Even If Prices Don't Collapse, Some Owners Will Feel Pain; Big Mortgages, Little Equity

Near nation's capital, a hot market cools

The Energy in Real Estate, By John Makin, Wall Street Journal Editorial Excerpts can be found at EconomistView. (Thanks to Dr. Thoma)

by Calculated Risk on 8/17/2005 12:00:00 AM

Dr. Leamer, economist and UCLA Anderson Forecast Director, said today:

"It's going to take several more months of information before we know whether this month was the turning point, but it sure smells like it,"

I agree. I'd like to see an increase in inventories, a drop in sales and the flattening of prices over several months before I call the top - but it sure "smells like it" right now.

Leamer said he suspects the affordability crunch is putting the brakes on San Diego's market, where the annual price appreciation has tumbled from the 30 percent range last year to 5 percent this year.

"Rising interest rates are making it just a little less affordable for certain home buyers, and when you pull out that fraction of buyers in a fragile market, that might be enough to turn the thing around," Leamer said

Columnist Bonnie Erge expressed my view succinctly in Waiting for the Bubble to Burst:

It's bubble-bursting time, if you ask me.

by Calculated Risk on 8/16/2005 10:25:00 PM

The online world receives another treat today as Dr. Altig of Macroblog discusses the labor market with MaxSpeak's Max Sawicky and Tom Walker. Check out the WSJ Econoblog: Debating Job-Market 'Slack'.

I'd like to make my own small mundane contribution. In January I cut Mr. Bush some slack with regards to job creation during his first term. Bush's first term, with a net loss of 759K private sector jobs (a gain of 119K total jobs), has to be considered disappointing. However there were some reasons for the poor net job creation, the most compelling being that the economy was clearly overheated when Bush took office.

Looking forward there are no clear reasons why the US economy shouldn't see more normal job growth during Bush's 2nd term. With the economy adding 1.7 million working age people per year (according to the Census Bureau), the US economy should expect a minimum of 6.8 million net jobs created during Bush's 2nd term.

On the upside, the participation rate could increase and the economy could add close to 10 million net jobs. This is a realistic upside; the economy added 10.8 million jobs in Reagan's 2nd term and over 10 million jobs during each of Clinton's terms in office. The economy is larger today, so as a percentage gain, 10 million jobs would be less than for the Reagan or Clinton presidencies.

So for Bush's 2nd term, anything less than 6.8 Million net jobs will have to be considered poor. And anything above 10 million net jobs as excellent. Of course, in additional to the number of jobs, the quality of the jobs and real wage increases are also important measures.

For the quantity of jobs, the following graph provides a measurement tool for job growth during Bush's 2nd term.


Click on graph for larger image.

The blue line is for 10 million jobs created during Bush's 2nd term; the purple line for 6.8 million jobs. The insert shows net job creation for the first 6 months of the 2nd term - currently just below the blue line.

I will update the graph each month.

by Calculated Risk on 8/16/2005 02:41:00 PM

For those that need more housing stories, I recommend the following sites:

UPDATE: Also REOWire Stories and commentary. "insight for the default servicing industry"

Patrick's Housing Crash Blog (story links)

Housebubble.com (story links)

Ben Jones' The Housing Bubble 2 (Commentary)

Prof. Pigginton's Econo-Almanac Based in San Diego.

And writing of San Diego, here are two articles on San Diego housing:

As housing slowdown takes hold in San Diego, experts differ on depth

Home inventory soars as buyers take their time