Thought Leadership

State of the Industry Q3 2012: An Interview With Dr. Peter Linneman

Trademark|July 16, 2012

Written by: Terry Montesi, CEO & Tommy Miller, President of Trademark

Terry: What are the key economic data that are affecting the consumer and retail real estate today? What has changed in the last 6 months and what do you see out there?

Peter: The main thing that has changed in the last 6 months is that we have about 900k more jobs. And while that is not stunning, that is kind of a normal pace. At least it means that 900k people that were previously unemployed that got their job back. The other way to view it is nobody who used to have a job who’s unemployed got a job back but everybody who newly entered the labor force because of population expansion over that 6 months got a job. Essentially it says that we are at least adding jobs fast enough to keep up with the natural expansion of employment that should occur if our population grows.

Tommy: Is that fast enough to keep the unemployment rate from increasing?

Peter: Basically yes. The reason the unemployment rate dropped as much as it did…it should have dropped about 10 base points over the last 6 months if all it was were the jobs we added. The reason it dropped by more than that was until this last month, we had a lot of discouraged workers that said “nope, I’m not looking, I’m just unemployed”. So that is what makes the unemployment rate odd is that it is a numerator and a denominator. It’s a little like an exchange rate in that regard. The bad news is the dollar should get weaker, it should be much weaker today than it was five years ago because of our problems. Then you say, “we’ve got more problems than we did 5 years ago,” but Europe has way more problems than they did 5 years ago. So the exchange rate strengthened. When you have ratios, it can be harder to understand. The thing that has really driven down the unemployment rate until the past month was the discouraged worker.


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