Rocket Fuel Newsletter – 05/13/2024

Built in 1897, a home in Reedville, VA, is on the market for $450K ... the only catch is it’s surrounded by water and in the middle of Chesapeake Bay!

In this edition: rent growth versus wage growth, help on the way for affordable housing, and how to interpret monthly employment data.

And when you’re done, check out the home in Chesapeake Bay that Zillow lists as “somewhat bikeable!”

Fuel Up! 🚀

Rents Have Grown Faster Than Wages

New data from Zillow and StreetEasy shows that rents have been increasing about 1.5 faster than wages. As expected with a nationwide study, much is dependent on location, as some areas have seen price increases slow thanks to an increase in apartment building supply. However, rent growth has topped wage growth in 44 out of the top 50 metro areas since 2019.

Where does your metro area rank?

The U.S. Housing Department Announces $5.5B For Affordable Housing, Homelessness

Twelve hundred communities throughout the U.S. will be receiving funding, with most of the funds going toward building stronger communities. This will not only improve affordable housing, but also increase economic opportunities for those who have fallen on hard times.

More information from U.S. Department of Housing and Urban Development here!

Let’s Talk About Employment Data

While it may not be the most fun topic to think about, employment – or lack thereof – plays a pivotal role in the health of our economy.

Every month, on what has come to be known as “Jobs Friday,” the Bureau of Labor Statistics (BLS) releases an Employment Situation Summary outlining the current unemployment rate and payroll data. The report is composed of data from two reports: the household survey, and the establishment survey.

Unemployment

The household survey estimates the unemployment rate by interviewing random households across the country. In simple terms, unemployment rate is the number of people who don’t have a job and are actively looking for work out of the total labor force (anyone who either has a job or is currently searching for one) – latest trends are shown below.

Another household survey measurement – underemployment – includes people who have given up on their job search or who have a part-time job but would like a full-time job.

A low unemployment rate paired with a relatively high underemployment rate could signify a rough job market where skilled workers are forced to settle for low-paying jobs outside their area of expertise.

Nonfarm Payrolls

The establishment survey looks at nonfarm payroll numbers along with hours worked and wages earned.

What does “nonfarm” mean? Exactly what it sounds like. “Nonfarm” payroll refers to anyone who doesn’t work on a farm, since the agriculture industry tends to mess with payroll data due to its seasonality and non-standard employment framework. So, the BLS simply ignores the industry altogether when it comes to payroll reporting.

Ultimately, the establishment survey tells us how many people are working, how much they are working, and how much they are being paid (as seen below).

Economic Context of Employment Data

The primary goal of the Federal Reserve is to facilitate a healthy economy. In pursuit of this goal, the Fed has what is known as a dual mandate.

The dual mandate is made up of two sub-goals – keep prices stable and maximum employment. If we can keep as many people employed as possible and inflation low, then everyone is happy, right? Well, kind of …

Over the past 2 years or so, the Fed has been struggling with the first aspect of the dual mandate – inflation. Meanwhile, employment data has been doing relatively well. This could imply that most people can find gainful employment; in turn, they are making enough money from their employers, to the point that demand is outpacing supply, which drives prices up.

In order to bring inflation down, we either need to increase the supply of goods to meet the higher demand or limit demand altogether. Every time we get good news regarding employment, that news is interpreted as another delay in bringing down inflation. And if we can’t bring inflation down, there is little hope that the Fed will be reducing rates any time soon.

Rocket Pro TPO was privileged to host over 400 mortgage professionals and real estate agents at All Access last week – thank you to all who made the trip to Detroit, we can’t wait to see how your business grows!

Our average solve time last week was over 2 minutes, and it would’ve been higher if not for 6 players who finished in less than a minute. Congrats to Chip (38 seconds) and Ali W. (31 seconds) for their top times!

This week’s puzzle gets 1 Rocket out of 5.

Click here to solve!