If the Housing *Is* the Business Cycle, What Does this Picture Mean?

That’s what Ed Leamer noted back in 2007. Residential construction employment, spending, housing starts, new home sales, all normalized to 2021M11.

Figure 1: Residential construction employment (blue), residential construction spending deflated by PCE (tan), housing starts (green), new homs sales of single family units (red), all seasonally adjusted, in logs 2021M11=0. Source: BLS, Census, Census/HUD, BEA, and author’s calculations.

Back in September, Leamer didn’t see an imminent recession. Not sure what we would make of the current data. In fact, he argues that housing is a less reliable predictor of recession, given the lack of a big buildup in housing in the face of continued strong demand, and the general strength of the financial system, in contrast to 2007.



This entry was posted on by Menzie Chinn.

Source Link

Comments are closed, but trackbacks and pingbacks are open.