My Mortgage Blog

Last month, when the employment report for September was released, most analysts were dismayed by the fact that job growth remained so tepid. I’m dismayed as well, but I have to wonder at the numbers were getting these days a point I’ll return to in a moment.

First, consider with me the fact that headline stories about the weak jobs report suggested the Fed probably wouldn’t soon start to taper the hip new economic term--its purchases of mortgage-backed bonds because the economy (especially in job formation) wasn’t living up to expectations.

You’re probably thinking, Wow, those same headline story writers probably wrote that the tapering may begin sooner than later, thanks to the good job formation numbers we got last week for the month of October and you’re right. Thus swings the economic pendulum.

But wait a minute. We know, for one thing, that the recent government shutdown has left a mark on these numbers. These are, as economists often have it, noisy numbers. But apparently, even if we factor in the noise caused by the shut-down and furloughs, we still can’t explain a truly irritating anomaly that arose last week.

Specifically, the size of the available job force in American fell dramatically last month. Meantime, the size of the unemployment rate among our nation’s households fell very little.

These numbers don’t add up at all. Yes, they are noisy, but the best economists I can find argue that there is some validity to them. Our job force has been trending down for quite some time. No one really knows why. Even at the current rate, the economy is pulling itself out of the damage done by the recession far too slowly. As Teresa Tritch of the New York Times wrote in her blog, at the average monthly pace of growth in the past year, it would taken nearly five years to replace the jobs that were lost or never created as a result of the Great Recession.

That makes the downsizing of the job force all the more ominous. As Jared Bernstein wrote, the persistent and sharp fall in the labor force is really just flat out scary in terms of future growth at the macro level and future household economic well-being at the micro level.

What he is hinting at is an unexpected plunge in household economic health and a significant slowing of the overall economy. He and others expect a season ahead in which many of our legislators embrace the idea that we are close to full employment, given the constraints on our current economic growth, and that we should therefore crank up interest rates and cut government programs in a big way, as we have, as an example, done with food stamps.

If he and others are right about the rabid mouse squeaking in the jobs reports, further slices to government safety net programs are precisely what we don’t need. For one thing, were talking about money that goes directly into our economy and helps to build it. And one possible result is that this housing recovery which hasn’t yet worked its way meaningfully into the huge first-time buyer market may fade before it has a chance to blossom.

What Id really like for Christmas, Santa, is a reasonably understandable explanation of the perils now facing our economy especially our real estate market and legislators with the courage and clarity of vision to do something about them.

I suspect we have the first intimations of a warning in these data. I doubt they will be the last. Maybe there’s something truly profitable in the spirit of giving that characterizes this season when it’s allowed to. As the old saying goes, what goes around comes around.