Why US property investment is a no-no – 11 ugly facts about the US economy: Michael Yardney

It surprises me that some people are still suggesting Australians should invest in US real estate.

The US economy is still grim, as outlined in the Financial Post by Gluskin-Sheff chief economist David Rosenberg in a recent article.

Sure, the US economy is improving and jobs are being created, but the tepid 80,000 jobs the economy added (10,000 below already low expectations) slammed stock markets and sent the price of oil into a nosedive.

But the real devil, as they say, is in the details, and there was no shortage of disturbing details in this report.

Here’s Rosenberg’s list of “cracks in the jobs market”:

1. The jobless rate has topped 8% for 41 consecutive months, a post-World War record.

2. Only half of the jobs lost in the recession have been regained. Normally at this stage of the cycle – even in the most acute jobless recoveries – employment would now be back to all time highs, says Rosenberg.

3. More than one in four households have at least one member looking for a job – that’s another record.

4. 5.4 million Americans who are still looking for a job have been out of work for more than a year.

5. More than 8-million Americans are working part time because they can’t get a full-time job

6. Self-employment has risen 242,000 since March. “We are becoming a nation of freelancers and consultants in this era of corporate downsizing.”

7. More workers have signed up for federal disability benefits than new jobs have been created since the end of the recession in June 2009.

8.  The number of people who have vanished from the workforce altogether has surged 7.3 million over the past three years.

9. The current labour force participation rate of 63.8% is below the rate at the end of the recession – a record low for a post-recession recovery.

10. Household income is 5.3% lower now than it was when this “alleged” recovery began.

11. Food stamps are surging to record levels, up 32% since 2009.

Rosenberg’s conclusion?

“The labour market is broken and needs fixing; clarity over the fiscal policy outlook, a coherent energy policy and tax reform that provides incentives to save and invest as opposed to conspicuous consumption would be a good start.”

I’ve given my thoughts on investing in US property in previous blogs which you can read here.

Steer clear.

Source: Financial Post.

Michael Yardney is the director of Metropole Property Investment Strategists , a best-selling author and one of Australia's leading experts in wealth creation through property. He also writes the Property Investment Update blog.