Have you ever been overly optimistic, hoping for something that was probably a long shot? I’m sure that there has been a time in your life when something that you thought would work out ended horribly, or ended in some unexpected and unfavorable way. But, you were still hopeful that things would end in a positive way, and you made predictions as such. I know that I have done this on many different occasions, making predictions based on my best-case scenario. Well, sometimes this comes back to bite you, or, as the say, it “puts your foot in your mouth.”
This is exactly what happened with unemployment predictions. I assume that most of you know that unemployment rose for the second month in a row, which does not bode well for the whole “economic recovery” thing. However, many analysts were sure that things would bounce back, and more importantly, were quick to say it.
According to the Wall Street Journal, at WSJ.com, “the government’s broadest snapshot of employment showed the nation added just 18,000 jobs in June. Private-sector hiring slipped to its slowest pace in over a year, and government continued shedding workers.”
“The unemployment rate ticked up to 9.2%, from 9.1% in May. The report also showed that even more workers dropped out of the job market.”
So, what does this mean for commercial real estate? Well, more jobs mean businesses are doing better and hopefully expanding, but as it stands more businesses seem to be cutting the fat and consolidating their workforce. So, if you are in the commercial real estate retail business then it could become harder to find new tenants and maybe even harder to keep the ones that you currently have. Also, if you are dealing with hotels, you could see a decline in business travel, which could decrease occupancy trends. Both things are not so “awesome.”
Basically, unemployment is not really good for anyone. Many things suffer from this, especially commercial real estate, businesses, and most importantly, the economy.
Do you think higher unemployment rates will greatly affect commercial real estate?
Source article by Justin Lahart and Joe Light from the Wall Street Journal at WSJ.com
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