2012 is starting off with a nice bang in that the economic news highlight of the week is the better than expected unemployment report. The nation’s unemployment rate dropped from 8.7% down to 8.5%. In past recessions it was always housing that led the economy out of the recovery, however for the first time ever, it appears that employment is going to be the catalyst for a housing recovery.

We are still a long way away from a strong labor market and there are still many signs of weakness in the employment sector. The addition of 200,000 jobs in the month of December, which is a nice jump from the 100,000 added in November, is a positive sign pointing towards economic recovery. I believe that it is just a matter of time before the home buying public starts believing more in the recovery and be willing to step into the realm of homeownership.

I am not sure if I have said this before or not, but I believe Lawrence Yun, the chief economist for the National Association of Realtors (NAR), may also be working at ADP. You may remember that that just two weeks ago Mr. Yun, announced that NAR had been over counting existing home sales by over 14% for a period of 5 years. Well just yesterday ADP predicted new job creation for December would be 325,000. As you just read in the previous paragraph the real number is 200,000. It appears that ADP either has Mr. Yun working for them, or there is someone else in the workforce who gets paid regardless of how wrong they always are.

Outside of unemployment, the economic indicators continue to show gradual strengthening in many areas. Construction Spending rose another 1.2% last month when experts were expecting only a modest increase of .5%. Month after month we have been seeing the trend of increasing spending in construction. When you combine this with the recent positive report from homebuilders showing that they are becoming more confident in the future of homebuilding, it may be sooner than later that potential homebuyers jump on the home purchase bandwagon.

Mortgage applications for purchases in the previous two weeks declined a more than expected 9.2%. Although mortgage rates remain at lows, the main culprit for the purchase decline appears to be related more to holiday celebration than anything else. The next few weeks of reports will be more of a real indicator.

The Federal Open Market Committee announced that they intend to me more forthcoming and transparent with the information they release regarding their future plans for interest rates. Up until this new change going into effect at the next Fed meeting this month, the Fed always would use vague language in explaining where they expected interest rates to be. Moving forward the Fed is going to be much more specific in that they will actually be providing expected interest data for the coming months, versus using the traditionally vague language that has become their cornerstone in their reports.

Factory Orders once again continue their month after month rise. The most recent increase of 1.8% is an indication that orders for durable and non-durable goods have become stronger each and every month since the start of the 4th quarter of last year. Additionally, manufacturing as well continued to accelerate in December continuing the growth momentum from November

First Time Jobless Claims remain well below the 400,000 mark coming in at 372,000 last week. The claims numbers seems to coincide with the improving employment picture.