Housing Industry Dominates Economy
From our good friend Barry Ritholtz's The Big Picture... serious commentary made in Forbes and quoted from Merrill analyst's, agreeing with our contention that this train won't need much of a push to derail...
"We find that the red-hot housing sector alone, which typically represents just 5% of the total economy, accounted for an astounding 50% of the overall growth in the U.S. economy by the first half of this year, and more than half of the private payroll jobs created since fall 2001 were in housing related sectors," Merrill Lynch economists Kathleen Bostjancic and David Rosenberg said in a economic commentary.
"We argue this represents an unhealthy and disproportionate share of economic growth. The over-reliance on residential investment leaves the economy very vulnerable if housing demand and prices cool--prices do not need to even fall, just a slowing in the pace of home price appreciation would have a noticeable negative impact on economic growth--not unlike the fallout following the frenzied tech over-investment in the late 1990s."
"We find that the red-hot housing sector alone, which typically represents just 5% of the total economy, accounted for an astounding 50% of the overall growth in the U.S. economy by the first half of this year, and more than half of the private payroll jobs created since fall 2001 were in housing related sectors," Merrill Lynch economists Kathleen Bostjancic and David Rosenberg said in a economic commentary.
"We argue this represents an unhealthy and disproportionate share of economic growth. The over-reliance on residential investment leaves the economy very vulnerable if housing demand and prices cool--prices do not need to even fall, just a slowing in the pace of home price appreciation would have a noticeable negative impact on economic growth--not unlike the fallout following the frenzied tech over-investment in the late 1990s."
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