Doug Marshall
Market Assessment
Published August 20, 2009

Oh, how exciting! Houston, we have a positive indicator.

For months, the news on the economy, especially as it relates to commercial real estate, has been gloomy.

Looking at the numbers, it’s been too difficult for us to believe that the “recovery” considered underway for the economy in general is going to apply, in real-time, to commercial real estate.

We were, after all, the last shoe to drop in the global downturn. Further thuds are pending, we have said: inflation, huge defaults in commercial loans… just more bad news.

So naturally when the Labor Department issued their monthly jobs report on August 7, we were as surprised as most macroeconomists.

And, in dissecting these numbers, we have of course decided to approach with caution, bringing out the poking stick to try to determine how real these numbers are.

The unemployment rate, according to this report, dropped from 9.5% to 9.4% during July.

It’s an encouraging sign to many that the jobless rate shows any improvement at all, when many were predicting 300,000 lost jobs instead of the 247,000 actually reported.

However, it’s important to maintain perspective and context:

  • This is a definitive, historical trend. As seen below in Barron’s Chart Of The Day from August 7, a one month drop in unemployment does tend to happen when a recession has ended.

So it’s encouraging that this might be considered empirical evidence, pointing to recovery.

  • On the downside, this certainly doesn’t mean that unemployment will continue decreasing. A third of those currently out of work are long-term unemployed. And these workers will find it harder to re-enter the work force, no matter how unemployment is slowing. Many have given up looking for work and, when they decide to try again, it’s going to play with that number.

So is this a recovering economy or an economy “adapting” to a lessened workforce (1)? An unemployment rate of 9.4% may be a heartening sign, but only compared to the Great Depression.

Still, at this point in our economy’s spiral, we’ll take any positive number that’s based on real improvement. Not caution to the wind, mind you, but crossed fingers…

Barron’s Chart Of The Day, August 7, 2009
(1) Larry Doyle,