What Comes Before Jobs?

Job creation is widely considered to be a leading indicator of demand for most types of commercial real estate. Is there a good leading indicator of job creation? Corporate profits: If a company is profitable, it will have an easier time securing debt or equity capital to expand, which usually means buying equipment and staffing up in order to grow its earnings. Nearly three-quarters of the companies in the Standard & Poor's 500 index exceeded earnings estimates in the fourth quarter. While some of this was due to cost-cutting efforts that included massive layoffs, companies can only pursue this strategy for so long. Eventually they need to expand in order to grow earnings and compete with their rivals, including competition for the best talent. Small companies are having trouble borrowing from their traditional lenders, the small banks, which are dealing with nonperforming commercial real estate loans still on their books. But large companies are able to tap the credit markets by issuing bonds, and this business has been booming. Companies have issued nearly $200 billion of debt year-to-date, up 17 percent from the same period last year. Can job growth be far behind?