Recovery mandates 250,000 new jobs per month: Freddie Mac
The U.S. economy needs to add more than 250,000 jobs each month for a sustained recovery.
Frank Nothaft, chief economist at Freddie Mac, considers this relatively uplifting news considering employers added 244,000 jobs in April — the most in almost a year. However, he is still leery of this actually happening because the country has not sustained this level of employment in recent years.
His comments were published in the May edition of Freddie Mac's Economic Outlook.
"The April unemployment rate edged up to 9%, April’s data reflected the 27th consecutive month that the rate was 8%," or higher Nothaft commented. "It is clear a new longevity mark will be set. Even the members of the Federal Open Market Committee, according to the projections they made in April, believe the U.S. unemployment rate will remain at or above 8% for the balance of this year."
Prolonged periods of unemployment are the most influential factors on the financial health of the housing market, Nothaft said, as unemployment drives default and delinquency.
"Future declines in the unemployment rate will certainly be good news and will help to push serious delinquency rates lower," the economist said. "Nonetheless, the extended period of relatively high unemployment rates will likely translate into a similar projected path for serious delinquency rates on mortgages."
Nothaft does expect the economy to improve in the second half of 2011, ultimately leading to a 5% increase in home sales volume compared to 2010. This will spur job growth and, hopefully, reduce mortgage delinquency rates, he said.
In Freddie Mac's April Economic Outlook, Nothaft maintained a positive perspective for the spring homebuying season.
Write to Christine Ricciardi.
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