Monday, March 20, 2006

Weakening Home Sales and Recessions


Note the white shaded areas are times of recession. This is no surprise as the housing market is very cyclical. It does make one wonder if this time a slowdown in the housing market would drive us into another recession. the pundits say no. looking at this chart and knowing that the whole rebound in the economy was driven by cheap money and a real estate boom (most new jobs since Bush elected in housing business) then you would have to conclude a slowdown in housing would put pressure on jobs and consumption. With 70% of US GDP consisting of consumer spending, you would have to then conclude a sharp deceleration in economic growth due to a housing slowdown would have a negative affect on US output

3 comments:

Jackass said...

you can click on the link for better view of the dates. the last major bottom in real estate was in '91 so we are way overdue for a correction

the kid said...

Yesterday the ole lady and I were watching the "Showcase of homes in central Arkansas" and she pointed something out: about 1 in 3 homes currently listed for sale were vacant, newly constructed homes; especially in the $125000-250000 range...just the right amount for builders to have about 2 or 3 going all the time...y'think that interest is eating their ass!?

Jackass said...

scary