National Economic Outlook for July ’22


The news that inflation is running at 8 percent isn’t a surprise but the political pressure for higher interest rates in response is certain to accelerate the end of the home price boom. That by itself isn’t so bad, it had to happen anyway, but the fragile nature of the economic recovery to this point now makes a new slowdown almost inevitable, with the possibility of a crash in home prices much more likely.

The economic recovery has been brisk in recent months but slow by historical standards. The number of jobs today is still lower than before the pandemic. The economy hasn’t grown much because the population hasn’t grown much; almost not at all in 2021 and probably less than half a percent this year. For decades it grew at least one percent a year, sometimes much more.

Population growth was already slowing for years before the pandemic – it’s not a covid problem – which suggests that slow growth will be the norm for a while. That means changes for real estate markets: lower demand and fewer people who can afford to buy a home.

Overall, the number of jobs in June was up 2.7 percent since October of last year. Jobs were up 2.7 percent in manufacturing, 2.9 percent in construction and 3.0 percent in business services. They were up 1.5 percent in retail, 1.5 percent in finance, 1.6 percent in healthcare, 0.5 percent in government and 5 percent at restaurants.

Compared to before the pandemic, however, 2 percent of jobs in healthcare, 3 percent of jobs in government, and 7 percent of jobs at restaurants are still missing.

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