In order to have a vibrant recovery in housing you must have a confident consumer that is employed, with stable to growing income, decent disposable income, and reasonable costs of necessities. We have none of those at this time.
The heavy price of central government is beginning to take a toll on all sectors of the economy, especially the largest pool of potential home buyers, the middle class.
Let’s start with jobs. Since April a paltry 155,000 jobs have been added per month, barely more than the 591,000 people who left the workforce in August alone, not enough jobs to meet population growth or put a dent in the perpetually high unemployment rate since the end of the Great Recession fifty-one months ago.
The biggest killer of jobs is unfolding with the implementation of Obamacare. HHS released initial insurance premium costs this week for the vaunted health care exchanges. It was more spin than fact putting the best case scenario forward.
Although rosy sounding prices were quoted that does not belie the fact that people are now mandated to purchase insurance that must comply with the ACA or be fined. Millions of these people who ironically have been reduced to part time work due to the law itself won’t be able to afford the insurance and those who can will receive a hit to their disposable income.
In a nutshell Obamacare harms the economy in more ways than just job creation. The uncertainty remains for millions who still don’t know what their costs will be, but we do know those costs are rising.
The Census figures for 2012 were released and household income adjusting for inflation is now back to levels last seen in 1989. The workforce participation rate fell to levels last seen in 1978. The 90.5 million working age adults out of the workforce is a record.
Consumer confidence fell to 79.7 in September following declines in both the Consumer Sentiment Index and the Gallup confidence poll. All are trending down with future expectations pointed down.
Interest rates retreated when the Federal Reserve decided to continue its bond buying program, however It doesn’t matter what interest rates are when there is no job creation, incomes are falling, and the consumer has lost confidence. All Bernanke did was add fuel to the inflationary pile of the trillions he has injected into the economy. It will catch fire one day.
Families disposable incomes are not only under attack from Obamacare, the EPA has joined in the onslaught. The new rules on carbon emissions for new coal fired power plants effectively puts coal on the road to elimination. Rules for existing plants are to follow.