Jobs and Economy

Q: What do you think will happen with the U.S. economy over the next 12 months?

Thad Wong: The U.S. economy, in comparison to the rest of the world, is very healthy. However, one area of real concern is the growing income gap. The upper class is growing its wealth faster than at any point in our history, while the percentage of those not able to make ends meet is also increasing at an alarming rate. Technology is all about efficiency, and efficiency removes labor. Less required labor means fewer entry-level jobs are created during the recovery/growth period. I’m not sure of a solution here, but the costs to operate our country at a reasonable standard are only going to increase. This is going to lead to even more political gridlock until the problem becomes so great that the choice not to act will be eliminated.

Bottom line locally, the upper-end neighborhoods with good public schools will continue to thrive, but the neighborhoods without will continue to struggle. I also believe we will see an enormous movement from rental to homeownership over the next 24 months. The new apartment buildings will have difficulty retaining tenants for more than 15 to 18 months on average. People who are spending $3,000 to $4,000 per month on rent are going to find a way to buy, and this will spur the for-sale market and the emergence of new-construction condominiums.

Scott Lackie: The economy should grow at about a 3 to 3.5 percent clip, which is good. Of course, the concerns are always there if Europe dips into a recession, or if there is a major terrorist event, etc. Oil prices remain low, which has the impact of a tax cut for consumers, and absent any other major catastrophes, the U.S. economy should outpace other countries.

Q: What do you see happening with the job market, and how will that affect housing?

Thad Wong: The job market in Chicago is picking up. The mayor is working hard to attract corporations to the city, and local entrepreneurs are establishing startups at a record pace. Startup incubators like 1871 are making a strong impact, and if we can get Chicago even more aggressive in the technology sector, our job creation will continue to improve at a strong level.

Jim Kinney: The job market is going to continue to be challenged. I think it will slowly improve. However, I don’t think that it’s going to move at the pace the government would like it to, so I think that’s going to cause interest rates to stay low. I don’t believe that the Fed is going to raise rates as soon as people think they are. We saw what’s going on in Japan, being kicked back into a recession. Globally, I think our recovery’s so fragile that the Fed is going to keep threatening it, but I don’t expect to see rates go up in the next year. You’ll certainly see mortgage rates staying under 5 next year.

And if you look, the hawkish people on the Fed are retiring next year, and I think they’ll probably be replaced with some more doves, which means we probably won’t see a push as a result of inflation – we see inflation around, but overall, numbers are down, energy prices are down and that’s going to filter its way through to the economy, allowing people to spend money elsewhere. But with energy prices dropping and the dollar surging around the world, it’s going to be a little tough on the job market because our goods are going to be harder to sell overseas and be less competitive. That’s going to put some pressure on the job market here.

Colleen Bara: The employment recovery has been encouraging, but flat wage levels are part of the equation. I think that if we continue to see strong job growth and low interest rates, we’ll see growth in home sales.

Wayne Paprocki: Depending on how the Affordable Care Act continues to move forward, we’re starting to see with a lot of companies, this is the first year that they can opt out. They’re going to cut your hours. They’re going to get you below 32 or 29, so you still have people working, but you’re not going to be subsidized. There’s a basic economic theory that says everything centers around capital, production, land and labor. What’s happening today is labor is being eliminated or being less used because of the capital equipment that can be used to do those things for them.

As far as the numbers, they will still be employed, statistically, but they won’t be making as much money. Some of the predictions for inflation, housing prices and interest rates could come together and squeeze some people. We may make our statistics look better on paper, but we don’t actually accomplish anything.

Scott Lackie: A lower unemployment rate will help housing, but the quality of the jobs created has to improve. There are many people who have given up searching for work and those people do not show up in the unemployment statistics. Our real rate of job growth is still a lot less than in other recoveries, which have seen more dramatic upswings when the economy turns up.

Carol Prieto: If the job market improves, it always helps housing. There’s no doubt about that.  With unemployment at the lowest rate it’s been for a very long time, I think the job market is improving.

Anthony Marinaccio: In terms of the local market, there are steady enough markets within a 90-mile radius of Chicago that can present itself more stable than the next, so as professionals, we need to find ways to be diverse in those markets. With our state economy, I think that now we are past the midterm elections, we the people as a state can start to focus on our confidence/growth in Illinois with jobs, which will lead to consumer confidence (in that job/role) that will increase spending and homebuying. I do think that we will have a similar or slight increase in the market, for the professionals that go out and get it.