- Nationally, we’re in the midst of the longest sustained GDP growth in the history of the country. In the midst of that growth, we’re seeing job growth slow, which suggests something is going on.
- Virginia has traditionally weathered recessions better than the rest of the country, in large part because of the federal government’s influence. Even in a recession, the federal government likes to spend money.
- Unemployment in Virginia is 2.9%, compared to 4% nationally
- Lisa explained that while this seems like a good thing, it’s not. We don’t have enough unemployed persons in the state to add jobs, and as you’ll see later we don’t have the housing inventory for people even when they move in from other states, so we’re in a sort of a stall there.
- Number of sales in Virginia are up 2% year-over-year through July (the New River Valley is DOWN 9.2%)
- Median home prices in Virginia are up 5% through July (the New River Valley is UP 8.3%)
- Inventory in Virginia is down 8% through July (the New River Valley is DOWN 15.6%)
- Homeownership rates in VA are at their lowest rates in the last 30 years (my note – some of this HAS to be because of inventory. If the inventory isn’t there, people aren’t going to buy because there isn’t anything to buy)
- the 25-34 year olds are starting to get a foothold, with increasing wages/savings/savings rates … if there’s a recession, will this set them back?
So there are a number of positives going on:
- Millenials and first-time buyers are entering the market
- Wage and income growth is widespread across most demographics
- Consumer confidence is strong, but this could change. Political uncertainty around policy can certainly have an impact on whether consumers or businesses buy goods, and all indications are that businesses are slowing their purchases
- Interest rates continue to be at historic lows, and will be
And there are some things that are not so good:
- Job growth has slowed
- Affordability, or a lack of supply, should continue to be a growing concern
- Low-interest rates have encouraged lots of refinancing, but not necessarily buying
In her talk, Lisa pointed out some of the indicators of an approaching recession. They include (with an ✅ if we’ve seen it already, and an ❌ if we haven’t seen it yet):
❌ capital investment has slowed
✅ manufacturing index is down
✅ yield curve favors short-term rates over long-term rates
* When the curve is inverted, it shows that people are more optimistic about the short-term than they are the long-term
✅ housing starts have slowed
✅ global economy is slowing
✅ interest rates are already low
✅ and ❌ uncertainty abounds (maybe it doesn’t abound, but it’s there)