|Economic Recovery Unfolding at a Disappointing Pace|
The pace of the economic recovery continues to disappoint.
There were mixed results in the Federal Reserve’s Beige Book, which observes economic activity across the Fed’s 12 districts. Dallas, Kansas City, Minneapolis, San Francisco and St. Louis districts continued to expand, but at a modest pace, while Atlanta, Boston, Chicago, Cleveland, New York and Philadelphia districts were lackluster at best.
Employment growth has also been discouraging, with zero jobs added in August and fewer than 160,000 new jobs created since May — far below what is needed to drive unemployment down from its exceedingly high level. Residential construction employment has been the hardest hit, with almost 1.5 million jobs lost since the peak in 2006 and barely any movement since it reached its trough in October 2010.
Other data show mixed results for housing. Private residential construction spending fell in July, but the cost of construction decreased. The composite price index of residential building materials declined modestly in August.
Despite the recent poor economic news, the economies of small metropolitan areas that don’t register on a national scale are recovering, and the NAHB/First American Improving Market Index (IMI) has started identifying them. To appear on the index, the areas must show at least six months of improvement in single-family housing permits, employment and house prices.
The inaugural IMI found 12 metropolitan meeting those conservative criteria, which are heavily concentrated in energy-producing states such as Texas, Louisiana, North Dakota, Wyoming and Alaska. With house prices improving — as observed in three consecutive monthly increases in the Case-Shiller and Federal Housing Finance Agency national house price indexes — the IMI is expected to grow steadily over the balance of 2011.