08 May The Labor Market Gets Pounded
The Bureau of Labor Statistics (BLS) reported that there were 20,500,000 jobs lost in the month of April. This staggering number is a record loss for one month and shows the dire state of the current labor market. This month’s report showed that the Unemployment Rate moved up from 4.4% to 14.7%. Had 6,000,000 people not left the labor force, the real percentage of people unemployed would have been much higher. With many businesses opening, the number of people receiving unemployment benefits should fall sharply. Let’s hope we move past this terrible time in the job market quickly.
The average hourly earnings were reported to have increased by 4.6% from the prior month, showing that lower paying jobs have made up the majority of those lost in April. Therefore, this number will largely be ignored and not seen as a threat of wage based inflation.
Resent studies have shown that up to 25% off all potential borrowers have lost their ability to obtain financing with most lenders through the Covid-19 tightening guidelines. This has deeply impacted the jumbo market, as well as Fannie, Freddie and FHA/VA financing. Taking the impacted segments out of the home buyer pool will mean that more people will be forced to rent. This is not good news for our longer term economic recovery.
We will maintain a locking bias.