A leading indicator for both housing and the broader economy leading into 2017, consumer confidence shows a post-election uptick.
This analysis of The Conference Board's Consumer Confidence Index from National Association of Home Builders senior economist Jing Fu notes that the measure jumped in the past month into confidence territory not seen since the middle part of the past decade.
Particularly encouraging in the data, current assessment of employment conditions, and consumers' outlook for employment in the near term are both strengthening. Fu writes:
Expectations of employment over the next six months improved. The share of respondents expecting “fewer jobs” declined from 16.6% to 13.8%, while the shares of respondents expecting “more jobs” and “same jobs” increased.
Too, the correlation between jobs expectations and plans to buy a home--either resale or new--comes through in the latest November readings, which, you can see here, are tracking in a positive direction.
Likewise, the University of Michigan measure of consumer moods--the Sentiment Index--showed similar strength during the month of November, perhaps a reflection of an American psyche that got a lift from either or both the outcome of the Presidential election, or the mere fact that it was finally done.
Survey of Consumers chief economist Richard Curtin notes:
The post-election gain in the Sentiment Index was +8.2 points above the November pre-election reading, pushing the Index +6.6 points higher for the entire month above the October reading. The post-election boost in optimism was widespread, with gains recorded among all income and age subgroups and across all regions of the country.
What's more, this morning's Employment Report from the Bureau of Labor Statistics could begin to show an important inflection point in labor force participation rates among younger workers. This analysis from Marketwatch senior economics reporter Greg Robb indicates that post-Great Recession forces had suppressed participation among 20 to 45 year-old workers during much of the jobs recovery over the past 36 to 48 months, but now there are signs that will change. Robb writes:
Prior to the recession about 82% of people aged 20-45 were in the labor force. The percentage fell to a low of 79% at the worst of the recession, said Jim Glassman, economist at J.P. Morgan Chase.
Faced with a tough environment, many young people opted to stay in school, even pursue advanced degrees, Glassman said. This trend was hard for government statisticians to decipher. But Glassman said there are signs this year that the percentage of this age group in the labor force is rising slowly.
“If the percentage returns to where it was, there would be another 2 million or so workers coming back,” Glassman said, adding “we could have another year or two of decent job growth.”
What that looks like from here, as well, is even more pent-up demand releasing across household formation, rent occupancy rates, and, eventually--as nature takes its course in mating and family formation--interest in ownership. NAHB senior economist Fu detects a lift even now in The Conference Board measures of intentions to buy either a new or resale home. She writes:
The share of respondents planning to buy a home increased to 6.5%, from 5.5%. The share of respondents planning to buy a newly constructed home and an existing home rose to 1.3% and 3.9%, respectively; the share of respondents who were “uncertain” whether they would buy a newly constructed or an existing home decreased to 1.3%.
Importantly, what happens between the "intent to buy" and the actual buying is an awful lot of variables, unpredictables, positive and negative forces and drivers. For young workers coming off the labor force sidelines and into the arena, one of the most important factors that will determine their household plans, preferences, and behavior will be the meaning, or purpose, or why? of their jobs.
The Atlantic team, led by Bourree Lam and Adrienne Greene, went out and talked with workers in many walks of life, about their jobs, about what working means to them, and about the pride and frustrations they feel in their roles as workers. Builders, developers, investors, and planners would do well to read some of these snapshots of how people talk about what working means to them.
Lam and Greene's survey of workers includes this one you might want to pay special attention to, as it hits home on a number of chords we've been talking about for months now. Lam speaks here with Lanier Spriggs, a construction manager in Chattanooga, Tennessee, who says:
Spriggs: It’s embedded in our brains that when you think construction you automatically imagine bricks and nails. You think of hard labor. But construction management is a different ball game.
We need to recreate the image of the construction industry. There's a lot of opportunity in construction. The construction industry, I think, needs to make a real conscious to sell itself to young men and women. A couple of years ago, there was a push for more college-educated people to join the construction industry. Some colleges put out commercials [about construction programs and careers]. I think that has kind of died down again. Information is key, and getting the information out about all the avenues and longevity of construction. It needs to be talked about and maybe even glorified like a doctor or lawyer. This is a field—when you talk about money—that is right there with the doctor or lawyer pay. But it doesn't always get looked at on the same, equal playing field as those industries sometimes.
Interesting point of view from a young fellow in the field. It kind of suggests reasons for a bit of confidence housing will come through this period where labor's a big risk and question mark, where lots are an unknown, and where ongoing finance is, at best, uncertain.
Confidence, though, is a one indicator of what's likely to happen next.