Jones Lang LaSalle's 1st Quarter Economic Overview on metro Washington, DC

Nation Expands Marginally Over Quarter

WASHINGTON, DC--Jones Lang LaSalle analyst Justine Morrison (top right photo) reports in JLL's Real Estate Market Intelligence Monthly newsletter the first quarter, 2008 U.S. economy grew at a rate of 0.9% (revised from 0.6%).

The fragile nature of the current expansion is evident when considering that GDP would have actually contracted without the first quarter’s growth in inventory levels. The forecast consensus is inventory levels will falter in the second quarter as companies struggle to unload current inventory and this will weigh down growth in the near term.

Total U.S. Nonfarm employment fell in each of the first three months of 2008 shedding 240,000 jobs; the first quarterly net loss of jobs in nearly five years. The unemployment rate increased during the quarter to 5.0% in April, 0.6 percentage points higher than the 4.4% cyclical low in March 2007.

Historically a half-point or more rise in the unemployment rate has always resulted in a recession. April’s employment report did provide some optimism, revealing a manageable 20,000 job loss, a sign that the economy may face a shallow rather than severe recession.

Some of the optimism stems from a sharp turnaround in the professional and business services sector. This sector, the largest component of the office-using segment, recorded three consecutive months of job losses to start the year shedding 102,000 jobs before it added back 39,000 jobs in April. It is hard to lend credence to one month’s result however it will be important to track this indicator in the coming months.

(For a complete copy of Justine Morrison's views, please contact John Sikaitis, vice president, corporate research, Jones Lang LaSalle, at John.Sikaitis@am.jll.com )