May 27, 2018

Good Economy or Bad? Yes

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Good Economy or Bad? Yes

Amidst contradictory economic news, homeowners' wealth is rising.

The spectacle of our federal government this fall struggling to fund its operations and pay its bills is only the latest bit of strangeness in what has been a strange time for our country.

The economy has been statistically out of recession for more than four years, yet a majority of households say we are still in a downturn. The Consumer Confidence Index has been rebounding from a low of 45 at the depth of the recession to a figure of 80. But 100 is the point at which more than half of the population says the country is heading in the right direction.

Inside View

Learn what the latest economic indicators mean for the real estate industry at the Economists' Outlook blog.

The August unemployment rate of 7.3 percent is an improvement from the rate of nearly 10 percent a few years ago, with 7 million jobs added in the past three years. Still, the economy shed 8 million jobs during the downturn and even today, the employment rate remains stuck at a low of 59 percent.

The housing market and stocks have been among the bright spots. Rising home prices have pushed up net equity holdings by $2 trillion in the past couple of years and stock gains have helped push total household worth to an all-time high, although that wealth is heavily concentrated in a small percentage of the population. 

The most telling evidence of the contradictory nature of our times is reflected in the net worth of home owners versus renters. On average, home owners have a median worth of nearly $200,000, while renters are essentially living paycheck to paycheck, with only $4,000 in net worth on average. And renters as a share of households are growing; their ranks having risen by 6 million from a decade ago.

So, we are living in the strangest of times. Let’s see if 2014 brings us more of the same or something different.

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