Housing market comeback gains more traction
According to Gus Faucher, senior economist at PNC Financial Services Group, the housing market is in the early stages of a recovery, which could mean an increase in construction jobs and a boost in job growth this year.
The National Association of Home Builders is out with its Housing Market Index. Happy homebuilders means construction jobs, plus a ripple effect as money is spent by consumers on new appliances and furniture. And many remain optimistic that the housing market is in the early stages of a recovery.
"We saw housing starts fall by about 75 percent after the great recession, we've seen a modest recovery since then, but there's still room to grow," said Gus Faucher, senior economist at PNC Financial Services. "We haven't seen much of a gain in construction employment, but as the housing market continues to recover, I do expect construction employment to pick back up, adding to job growth this year."
Faucher also sees room for potential growth in the new inflation numbers out today. "Inflation is under control," says Faucher, which means "the Fed is going to be able to keep [interest] rates low to support the recover."
Another number to keep your eye on is the one on your weekly paycheck. Part of the fiscal cliff deal was an increase in what comes out of our checks for social security.
"The Social Security payroll tax was raised by 2 percentage points on roughly the first $110,000 of labor income," says Faucher. That means "if you make 50,000 a year, you're going to see your payroll taxes increase by about a $1,000 and that's going to be a hit to consumer spending. People are seeing less in their paychecks this year compared to last year, they're likely to cut back on their spending somewhat, and so that is going to be a drag on the economic growth in the first part of 2013 as people begin to adjust."