March 18, 2022

The economy is improving as the pandemic recedes, but the war in Ukraine could easily send it into reverse, quite aside from the possibility of nuclear weapons. We’re in a situation where the unknown is so great that a defensive posture is best for investors.

That said, the biggest concern for real estate markets remains the surge in home prices that has affected most markets in the US. The average price increase in the last year was 18 percent and in some markets as much as 30 percent. There’s a strong possibility that the boom will peter out by the end of 2022, with an additional 10 percent rise in prices, but whether prices then remain high or come crashing down in some markets is too uncertain to forecast.

A lot depends on how well the rest of the economy performs, and right now that looks pretty good.

As I said last month, instead of measuring the number of jobs against the level before the pandemic, we’ll now report how well they grow from late 2021, by which time the bulk of the recovery had taken place in most sectors. It’s the same job data but seen from a new reset point.

Overall, jobs in February were up 2.1 percent, including gains of 2.5 percent in construction, 1.6 percent in manufacturing, 1.3 percent in retail, 1.2 percent in finance, 1.0 percent in healthcare, and 0.4 percent in government. Healthcare and government are the sectors where large numbers of jobs seem gone for good.

Jobs grew 5.3 percent at restaurants, even before the end of the omicron surge. And the best news is that jobs grew 2.8 percent in business services, the sector that was one of the engines of growth before the pandemic.

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