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1

JUNE16, 2014
A Cushman & Wakefield Research Publication
RESEARCH REPORT
WEEKLY ECONOMIC UPDATE:
FULL RECOVERY: FINALLY HERE


FIVE YEARS OF RECOVERY
The U.S. economy officially entered a
recovery from the 2007-09 recession
in June 2009, which makes this month
the fifth anniversary of the recovery.
By just about any measure it has been
one of the slowest recoveries on record. Job growth has
been modest, overall gross domestic product growth has
been about half of the average of the four previous
recoveries, and many economic indicators are just now
reaching pre-recession levels.
Over the last two weeks several indicators finally
recovered to pre-recession levels.
Payroll employment rose to 138.5 million jobs in
May, topping the 138.4 million level reached in
January 2008 when the economy entered the
recession. For the first time in more than six
years, employment is at a record high.
Unemployment claims continue to trend lower.
Although the number of people filing for
unemployment was up slightly in the latest week,
the four week moving average is at 315,000 or
so. Last week it was at 310,000, which was the
lowest level since mid-2007. When claims are
down around the 300,000 level that is generally
consistent with healthy job growth.
Small business optimism is climbing, The Small
Business Optimism Index of the National
Federation of Independent Businesses rose in
May to its highest level since September 2007.
The proportion of firms adding jobs rose for the
second consecutive month and, perhaps more
significantly, the proportion of firms stating job
openings are hard to fill was also at the highest
level since late 2007. And they are paying higher
wages. Over the past three months the
proportion of small businesses reporting that
they are raising compensation was the highest
since early 2008. It seems that small businesses,
an important contributor to economic and job
growth, are feeling pretty good about their own
prospects and the state of the economy.
The Labor Departments Job Openings and
Labor Turnover report showed the number of
job openings jumped 6.9% in April to the highest
level since 2007. Hiring wasnt quite as strong,
but with the number of openings rising, we
would expect to see hiring pick up as well.
Last, but far from least, motor vehicle sales in
May were the highest since February 2007.
All this data indicates that after five years, the economy
has finally made a full recovery from the most severe
recession of the past 80 years. We are now in the early
stages of an expansion.
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
T
h
o
u
s
a
n
d
s

o
f

P
e
r
s
o
n
s

Total Job Openings
Source: U.S. Bureau of Labor Statistics
June 16, 2014
Other economic statistics released last week were not
quite so positive.
Retail sales increased only 0.3% in May, mostly due to
strong auto sales. But the growth in April was revised
upward and sales were up a healthy 4.3% from a year
ago. We suspect that cool weather in May had an impact.
The University of Michigans Index of Consumer
Sentiment unexpectedly declined in early June. The
decline was very small, and frequently these preliminary
readings get reversed later in the month. But the
continuing softness in sentiment suggests some
scepticism about the economy perhaps due to the
sluggish recovery.
Overall, we feel the preponderance of the economic data
continues to point to a much healthier economy than we
have seen in several years. The American economic
engine is revving up and while it may not be running on
all cylinders, it is getting close.
We have long maintained that the economy will shift to a
higher growth trajectory when business priorities change
from worrying about costs to worrying about losing
sales. The improvement in small business confidence
coupled with the rise in the number of job openings
suggest that this is now starting to happen.
Of course, stronger growth has a positive impact on the
commercial real estate industry. More jobs mean more
demand and faster income growth. If we are correct, the
commercial real estate industry is likely to see the
currently healthy national market continue to improve.