The numbers are out of whack


By DON FENLEY

The numbers are out of whack or is it the way we try to look at the economy?

For a couple years now I’ve been localizing labor market and housing market information.  It shouldn’t be such a mind tangling chore.

The labor market can be localized with two reports. One focuses on a population survey the other on an employment survey. Theoretically they should tell pretty much the same story. When jobs go up so should employment.

Wrong.

It goes back further than the recession but that when things started getting hinky.  And in 2012 they began to contradict each other.  I’ve noted the contradiction and pointed out the difference, but have never really hit a good explanation. Recently two of the experts in their respective fields are talking about the same thing.

ETSU economist Steb Hipple turned the full force of his observation on it with his fourth quarter labor market analysis.  Employment was headed lower, but jobs were being added and sales tax began growing.

But when employment trends lower you’d expect sales to do the same.

Expect to see more about this in the coming months.

And then there’s the housing market. Like the labor market there’s two metrics.

Existing home sales are doing pretty good. Most of the local markets – and the regional market – got back to pre-recession levels, but the new home sector is moving along at less than half of its single-family pre-recession performance level.

Marketing Edge CEO Dale Akins recently presented his housing market outlook for Kingsport and Johnson City Builders’ Association. His bottom line was look for things to contract in 2015. And it’s not hard to see why. When you look at the numbers that’s what they say.

Somewhere in all this is the emerging realization that the Tri-Cities economy has begun marching to its own drummer.

The labor market doesn’t react in much similarity to the rest of Tennessee.

Housing is a little different, but its local performance has always been understated and overestimated.

The best way to look at housing is simply this: If you’re going to vacation in Myrtle Beach you don’t check weather conditions in Washington, D.C.

The only housing data that counts is local, local and more local. The Case-Shiller Index is a good metric, but remember this: None of the data for it comes from Tennessee – much less the Tri-Cities.

More to come on this too. The trick is going to be to combine the conflicting metrics and give the overall market some context.

 

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