I thought that losing this source of cash would dampen consumer spending--everyday, 5 or 6 home-onwers would walk out of our offices each day with $5,000-$20,000 and now most days no one leaves with that amount of cash. A commentary piece on CBS Marketwatch confirms the danger. Mortgage refinancings are down, but jobs are not increasing. This recovery is doomed if it doesn't start creating jobs soon.
Where's the beef?
Commentary: Economy still isn't creating any jobs
Irwin Kellner
By now, employment gains should have taken over from low mortgage rates as the chief driver of the economic recovery. Long-term interest rates are rising as they usually do at this point in the cycle (see my column of May 20), but job creation is not.
According to the Mortgage Bankers Association, the jump in long-term rates has pushed mortgage refinancings down 80 percent from their May peaks. This effectively chokes off a major source of consumer spending -- money that people have been able to pull out of their homes.
Such a development is not surprising. What is startling is that job creation does not appear to be not coming along to lend a helping hand.
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At this point in past recoveries, there were 6 percent more jobs than there were at the end of past recessions. Even in the so-called "jobless recovery" following the 1990-91 recession, employment was rising at this juncture. But now, 21 months after the 2001 recession ended, there are 1 percent fewer jobs.
This puts the U.S. economy in uncharted territory. We have never had a sustained recovery without job creation.
