econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 28 May 2016

Housings Role In The Slow Recovery

from the Philadelphia Fed

-- this post authored by Burcu Eyigungor

Homebuilding contributed to overall economic growth in every previous U.S. economic recovery since 1947, yet contributed next to nothing in the first three years of the recovery from the Great Recession. Home construction had been such a reliable indicator of recovery that its failure to promptly rebound led economists during the early years of the recovery to repeatedly forecast that a housing turnaround was right around the corner.

The magnitude of the housing boom in the early 2000s was unprecedented, and its effects on the housing sector lingered for years. As I will show, the slow recovery in homebuilding and the economy was partly a byproduct of the fast increase in house prices and homebuilding in the early 2000s. To explore this dynamic further, I examine some key factors at work in this period: What happened on the supply and demand sides of the housing sector during this past boom and bust cycle?

WHAT HAD WE COME TO EXPECT AFTER A RECESSION?

Homebuilding - measured by the amount of money spent on house and apartment construction, including major renovations - is highly procyclical. In every recession since 1947, the share of residential investment relative to the gross domestic product (GDP) has fallen and then recovered during the subsequent expansion (Figure 1). This pattern implies that home construction is more volatile than GDP in general: In a typical recession, residential investment declines more than GDP does.

The second well-established fact is that homebuilding leads the business cycle.1 The recovery in homebuilding starts on average two quarters before the recovery in general economic activity. In that sense, home construction is an important jump-starter - that is, it precedes and makes possible the overall economic recovery. Economists have also pointed out that this lead/lag relationship might be due to monetary policy - that is, lower interest rates first trigger a recovery in housing because of easier mortgage financing, followed by recovery in other activities.2 Residential investment has contributed almost 1 percentage point to real GDP growth on average in the first year of a postwar recovery.

[click on image below to continue reading]

Source: https://www.philadelphiafed.org/-/ media/ research-and-data/ publications/ economic-insights/2016/q2/ eiq216_housings_role.pdf?la=en

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



You can also comment using Facebook directly using he comment block below.





Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
A New Era of Central Banking?
Is Free Trade Harming the Economy?
News Blog
01 February 2017 FOMC Meeting Minutes: Little Seems to Have Changed Since the Previous Meeting
An Inside Look At Doomsday Bunker Homes With A Price Tag Of 2 Million
January 2017 Headline Existing Home Sales Surprisingly Good
China Moves To Put North Korea In Its Place
Trucking Data Improves In January 2017
February 2017 Chemical Activity Barometer Has Strong Gain
Infographic Of The Day: 2017's Top New Year's Resolutions
Early Headlines: Asia Stocks And Dollar Up, Oil And Gold Steady, Nat Gas Plunges, Fed's Williams Says Low Rates Will Last, Steep UK Brexit Bill, Greek Poverty, China Stocks Look Up? And More
Climate of the Southwest
Did the Romans Create both Christianity and Islam?
The Psychology Behind Trump's Awkward Handshake ... And How To Beat Him At His Own Game
Most Lawsuits Against Trump Related To Travel Ban
Average Gasoline Prices for Week Ending 20 February 2017 Statistically Unchanged
Investing Blog
The Real 401k Plan Manager 20 February 2017
Investing.com Technical Summary 21 February 2017
Opinion Blog
The Blame Game
Fascism Defined And Described By Oswald Mosley
Precious Metals Blog
Deflation And Gold: A Contrarian View
Live Markets
22Feb2017 Market Update: DOW Rises To New High, Are Investors Betting That Nothing Will Go Wrong In Next Few Months, Crude Prices Slip Further, Investors Are Way Too Optimistic
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government





























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved