Economist's Commentary: April 3, 2008

Quick Take on the Economy: April 3, 2008

By Lawrence Yun, Chief Economist

NAR Chief Economist Lawrence Yun

The unemployment claims of first-time filers rose significantly in the past week to 407,000 from 369,000 the week before.
A consistent weekly reading of 400,000 jobless claims would correspond to recessionary conditions. It is the first reading over 400,000 since early September 2005 when there was two straight month of above 400,000 claims - and the economy did not go into a recession then. There had been fairly consistent above 400,000 reading from September 11, 2001 to the summer of 2003 - when there was a formal recession.
The continuing claims (people receiving checks beyond the first week) also rose notably. There are now 2.94 million, up by nearly 100,000 from the week before. It is the highest figure in almost 4 years.

The ISM Index for the service industry rose modestly to 49.6 in March from 49.3 reading in February. The reading is below the 50 mark, implying a slight contraction.
The ISM Non-Manufacturing index was created several years ago to complement the reading on the old horse ISM, which was strictly from manufacturing industries since the service sector is much larger than the manufacturing sector in the U.S.
Business activity and new order components of the index were in an expansion state, but the employment component showed contraction. That is, more is being done with fewer employees.

We are moving very close to recessionary conditions, particularly as it relates to jobs.
Positive gains on service activity and new orders imply a little comeback on the economy.
The mixed signals are essentially saying we are slightly above or slightly below the zero growth line on the economy.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

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