The economy may have survived this election
INDICATOR: » September Job Openings, Mortgage Delinquencies and October Small Business Optimism. KEY DATA: » Openings: +33,000; Hires: -187,000/ Delinquencies (Over Year): -24.8 PERCENT/ NFIB Optimism: +0.8 points; Economic Expectations: -7 points. IN A NUTSHELL: » “The labor market may be tightening and the housing market healing, but the election is worrying small business owners.” WHAT IT MEANS: » Hooray, it’s Election Day and I just got back from voting. It looks like a record turnout in my area. I live in a swing state, where there is also a critical Senate battle, and a swing county, where there is a key Congressional seat at stake. In a few hours, I can take off my sound canceling earphones, replace my remote’s mute button and once again start watching network television. The decibel level and nastiness of the political attacks has made me skip television except for On Demand, HBO and stations that are too small to bother with. Today is freedom for my eyes, ears and mind day.
OK, what about the economy? It is actually pretty good. The Job Openings and Labor Turnover Survey (JOLTS) showed what we all know: There are lots of job openings but not a lot of people to fill those positions, so hiring is lagging. The openings rate, which is openings compared to employment, is slightly below the record high. If firms are not listing openings because they assume they will not be
filled, the rate may be artificially depressed. The key quit rate is also moving up to near record highs. This indicates workers are finally feeling confident about moving from one job to another.
The housing market is close to healed. Home prices are nearing previous highs nationally and are above them in a growing number of markets. But more importantly, the number of distressed homes is nearing pre-recession levels. CoreLogic reported that the percent of homes that are seriously delinquent dropped sharply in September and now stands at the lowest level since August 2007. The foreclosure rate is also dropping, which makes sense given the declining number of homes facing action. There are just a few states, such as New Jersey and New York, where the percent of homes in foreclosure remains extremely high. The drop in the number of problem mortgages is reducing supply and helping drive up prices.
The National Federation of Independent Businesses reported that confidence rose minimally in October. However, it was pointed out that key decisions, such as capital spending, are being placed on hold because of uncertainty over the election. Hopes that conditions will improve over the next six months plummeted. MARKETS AND FED POLICY IMPLICATIONS: >> Given this campaign, does anyone think that investors will be watching today’s numbers closely? They aren’t trees falling in a forest, but they aren’t going to make any waves either (my mind is fried from this election, so please excuse the mixed metaphors.) But they do add to the growing pile of data the Fed can use to argue for a rate hike.
Joel L. Naroff is president and chief economist of Naroff Economic Advisors. He can be reached at 215-497-9050 or joel@naroffeconomics. com. On the Web: www. naroffeconomics.com.
Stacie Johns-Fink of GYMGUYZ demonstrates a platform power system for a core workout at West Goshen Community Park.