Eight years ago, if you read columns about economics or housing, you'd come across this one-word sentence pretty often.
All that was wrong with housing--the fraud, the fantasy money, the false promises lying beneath misplaced dreams, the failure of every fail-safe system, and the flood of human consequence--could only begin to heal if, first, the tides of lost jobs began to turn.
So, here we are, about 12 million private and public sector payroll head count increases later. The tides turned. The latest employment report released by the Labor Department Friday punctuates the fact that jobs resilience--in both payroll growth and wages--is a going concern in our economy.
Still, even though we got all we could have wished for and more as we peered into the future eight years ago, we're not seeing the pick-up we thought we'd see in housing.
So, the question now is whether structural constraints now bind our economy--domestically and globally. We're left with one of economics' more humbling quandaries, not knowing whether it's supply that's off the rails, or demand.
New York Times economics correspondent Neil Irwin writes in "We're in a Low-Growth World. How Did We Get Here?":
Weak productivity and fewer workers are hits to the “supply” side of the economy. But there is evidence that a shortage of demand is a major part of the problem, too.
Think of the economy as a car; if you try to accelerate far beyond the speed it’s capable of, a car won’t go any faster but the engine will overheat. Similarly, if the voluntarily exit of people from the labor force and lower-than-expected gains from technological advances were the entire story behind the growth slowdown, there should be evidence the economy is overheating, resulting in inflation.
Which is not happening, Irwin notes.
So, if 12 million new jobs in the past 8 years didn't get us the adrenaline surge needed for housing, what will?
It may be the same one-word sentence. Jobs.
Only, what those jobs are, and what pay comes with them, and where they're located, and what they produce may be vastly different than we could have imagined 8 years ago, and we're only beginning to imagine now.
Infrastructure spending, with all of the skilled and unskilled labor that those projects require, is looked at now as the catalyst the economy has been missing, and no doubt these projects are sorely needed.
Fact is, though, new jobs, new productivity, new models for both supply and demand, new processes, and process management probably lie outside the scope of current predictive algorithms, because those projections aren't very good at understanding people at either the household nor the firm level.
What a low-growth economy means for housing today--with today's models--is that not everybody wins, even if the trajectory improves. Adverse conditions continue to stress test every business and every business model, and it's those who revel in the challenge, spite the bitter taste of failing, and find new better ways to give people a timeless value who'll be here eight years from now and eight years later than that.
The models broke. When the pie's not expanding, it doesn't mean your slice shouldn't be bigger.