Chris Farrell: Looking forward to 2011
TEXT OF INTERVIEW
JEREMY HOBSON: Later this morning we’ll get a look at how many new applications there were for unemployment benefits last week. It’s one of many weekly indicators we use to gauge the healthy of the economy.
But since it’s the end of the year we thought we’d take the long view with our economics correspondent Chris Farrell. He’s selected a few other measures of the economy that he’s been following and will be following next year.
Hi Chris.
CHRIS FARRELL: Hey Jeremy.
HOBSON: So let’s start out with housing since the latest numbers that we got just this week are pretty gloomy. Prices are down across the country. Supply is up. What are you going to be watching here in 2011?
FARRELL: I have a slightly more optimistic take on the market, and it has to do with the indicator that I’m following. Home ownership versus renting, because remember, these two markets compete for the household dollar. Richard Green’s, professor at University of Southern California did a back of the envelope calculation looking at the median home versus the median rental unit, and what he decided is that for 2011, that owning the median home is about 10 percent less per square foot than renting the median rental unit. What that tells me is, you can still have some price declines in ownership is good.
HOBSON: So there’s a glimmer of hope there in the housing market for the year ahead. How else are you going to gauging the economy, Chris. I mean we talk about GDP growth, or durable goods orders, things like that. What are you going to be looking at?
FARRELL: Apple stock. Apple stock. Now can I read you one number?
HOBSON: Absolutely.
FARRELL: One number. Ok, so this comes from Morning Star, and I clicked on their 10 year chart. And it says the overall change in Apple stock for the decade, 4275.77 percent.
HOBSON: Oh my god. 4000 percent.
FARRELL: Can you imagine? This is incredible. This is important. This is the innovated side of our economy. Google, Facebook, Twitter, the whole wireless mobile internet world, and this area of our economy is exploding. That’s the real glimmer of hope.
HOBSON: Why didn’t you tell me about the apple stock 10 years ago Chris? Now alright, so the tech sector is doing well, but what about jobs? That’s got to be the biggest story of the year or at least one of them.
FARRELL: It is, so let’s watch the temp sector. Over a quarter of all job hires by the private sector in 2010 were temp jobs. That’s going to continue in 2011, but hopefully eventually, we’ll see those turn into permanent jobs.
HOBSON: Alright Marketplace Economics correspondent Chris Farrel, happy New Year, thanks so much for everything in 2010, and we well be talking to you very frequently in 2011.
FARRELL: Happy New Year.
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