Jobs are everything to an economy. Period.
So goes the number of jobs, so goes (in general) the demand for housing, commercial real estate and the overall performance of the economy. Naturally other factors such as taxes (or the lack-thereof), location, natural resources and external factors alter all of this, but the ultimate measure is jobs, followed by incomes.
The same is true when it comes to housing. As I had repeatedly said, there are only three types of people that do not need a job to own a home: gray haired, blued haired or people without hair – retirees. Almost everyone else needs a jobs. Markets with strong job gains no doubt correspond with robust demand for real estate and related services.
So what states continue to outperform and which ones remain lackluster? As usual, I invoke the TINSTAANREM axiom — There Is No Such Thing As A National Real Estate Market. Nor is there such a thing as equal performances across state economics.
The following table shows the latest performance of all 50 states and the District of Columbia based on job growth for the 12-months ending October 31, 2017. Just two states continue to post year-over-year job losses: Wyoming and Kansas. Wyoming is impacted by both coal (Wyoming extracts more than one-half of all the coal mined in the U.S. each year), and oil and gas (prices have been relatively cheap but rose in the past 60-days). A relatively narrow economic base in Kansas and cheap agricultural commodity prices continue to challenge the state.
The following table, in addition to detailing the latest 12-month job growth rate also breaks out total 12-month job gains and total number of jobs, each expressed in thousands.
While some trends in job growth (or losses) can be long-term in nature, events can materially impact these in the short run. The next table shows the relative rank and percentage change in job growth for the 12-months ending August, September and October 2017. Recall that Hurricane Harvey hit Texas in the last week of August 2017 impacting approximately one-third of the state, while Hurricane Irma literally shut down the Florida economy for almost two weeks in early September. While Nevada and Utah consistently remain in the top two positions over each of the three months, Florida slipped from 3rd best in August (pre-Irma) to 39th in September (post-Irma with leisure and hospitality industries offline for one-half of the month), springing back to 6th overall in October.
Given the historical performance of job growth in the 12-months following events such as natural disasters such as hurricanes and fires, I fully expect Texas, Florida and Idaho(fires) to perform impressively in the coming 12-months.
A surprise performer in the past three months is New Mexico, which has jumped from 35th overall as of August to 14th in the latest month. No doubt some of the gain was oil and gas related, but renewed defense and aerospace industry spending across the U.S. are positively impacting the state.
Job growth, which to me is the ultimate proxy for overall economic performance, bodes well for many states, is pessimistic for others, and very dynamic as far as changes are concerned for yet others.
Jobs are everything.