What is the definition of a “K-shaped” economic recovery? A “V-shaped” is a quick and sharp recovery and a “U-shaped” recovery is more gradual. The “K-shaped” recovery is bifurcated. This means that certain segments of the recovery are happening at different speeds. In this case, the real estate sector definitely represents the rising part of the “K.” Other sectors are not so lucky.
Last week we saw a reading on a key sector – jobs. Last year the economy lost approximately 20 million jobs, but gained 10 million back as the economy recovered. The jobs recovery slowed as the year came to a close. How did we do in February? The economy added 379,000 jobs, which beat expectations. The previous month was also revised higher by over 100,000 jobs. Overall, the unemployment rate fell to 6.2% from 6.3%, though the labor participation rate continued to lag.
Right now, the jobs recovery represents the lower leg of the “K,” but this report contained hope that this leg may rise as well. If you would look at a stock market reaching record highs—stocks have already recovered. Interest rates have also been rising lately, indicating increased confidence that the economy is going to recover more rapidly. But as the data shows—we are still not firing on all cylinders. Remember, the markets move in anticipation of what we think is coming. Stocks and bonds are signaling a brighter future. Though these indicators are not always right, we hope they are this time around.
Dave Hershman is the top author in the mortgage industry. Dave has published seven books, as well as hundreds of articles and is the founder of the OriginationPro Marketing System and Mortgage School. Want to send this commentary and other news in a personalized format to your sphere database or on social media? Sign up for a free trial at www.OriginationPro.com.