The Budget Control Act's automatic spending cuts, allowed to roll into effect by Congress last week, risk stalling the relatively positive trends in the employment market. However, the full impacts of the sequester will not be fully understood for at least several months. On the positive side, recent gains in home values and new home construction are strong proxies for continued strength in the job market.

The unemployment rate typically follows housing expectations and trends. Unemployment is correlated to home prices and housing starts and high unemployment is commonly associated downturns in these indicators. The relationship between housing and employment can be somewhat of a chicken and the egg enigma - housing will recover when the job market recovers, but the job market cannot recover without a rebound in housing. But, given the stubbornly high unemployment figures and the improving housing market it appears that in this recovery, housing has rebounded first and will do its fair share to bring improvements to the job market.

Last week the provisions of the sequester went into effect when Congress failed in negotiations to agree on a budget plan. Although the sequester implements longer-term reductions in spending, the automatic spending cuts threaten to deal immediate short-term blows to the United States (US) economy. While the impacts of the sequester may not be seen as early as the release of the upcoming ADP Employment Report this Wednesday, it will likely reflect a worsening or flattening trend in the jobs market over the coming months.

In the case of the sequester, housing indicators may actually help to lift the job market. Property values increased nearly 10 percent year-over-year in January and that has a direct and positive correlation historically with employment data.  Strong performance in residential construction, which is a leading indicator of job growth, has nearly doubled year-over-year and will continue to drive job creation. As evidence, construction jobs have been up nearly 20 percent year-over-year. Moreover, a healthy housing market has the ability to create nearly three million direct jobs including real estate professionals, skilled labor jobs, and utilities specialists.

Employment training programs will see a $460 million reduction in 2013. Employment assistance services will also be cut.  The youth employment and dislocated workers programs funded by the Workers Investment Act will cut off services to nearly 30,000 dislocated workers and 13,000 youth workers in 2013.  Notably, dislocated workers make up 40 percent of the unemployed population. These workers will more than certainly be casualties of the sequester. If these individuals continue to struggle to gain employment and loose important training resources, they will keep the unemployment rate above historical norms.

In addition to cutting services, the sequester will likely risk approximately 48,000 healthcare jobs, 470,000 manufacturing jobs and 610,000 federal jobs.

Whereas the Federal Reserve originally estimated that unemployment would drop to as low as 7.4 percent in 2013, a study published by George Mason University projects that the sequester will actually increase the unemployment rate to over nine percent in the upcoming year.

Sequester or not, it appears that the housing market is on a strong upward trajectory. While the impacts of the sequester are uncertain, the housing recovery should bode well for employment tin the long-term.