More proof was reported this week by Bloomberg that the so-called "recovery" has been nothing more than a cruel mirage perpetrated by the politicos, the Federal Reserve and the mainstream media:
More than two years after the U.S. recession ended in June 2009, construction of single-family homes is heading for its worst year on record.I've said it before, but it cannot be repeated often enough. Without a recovery in housing there is no real economic recovery. Housing will not recover unless new good paying jobs are added to the economy. Good paying jobs will not be added to the economy as long as energy prices remain elevated, squeezing the margins of employers and consumers. Energy prices will remain elevated as long as new cheap sources of oil are not being discovered. And peak oil means we have used up or are currently pumping from all of the cheap sources of oil.
The CHART OF THE DAY shows that while total housing starts bottomed in 2009, construction of one-family houses will probably post a new low this year at around 419,100, about 11 percent less than in 2010, according to Bloomberg News calculations. The building industry is being propped up by a projected 45 percent jump in work on multifamily units as more homeowners who lose their homes to foreclosure become renters.
“A lot of people just look at the headline numbers, they don’t realize the breakdown tells the story,” said Michelle Meyer, a senior economist at Bank of America Corp. in New York. “Foreclosures are forcing people to transition from ownership to rentals. In a sense, the multifamily sector is benefiting at the expense of single-family.”
Americans have little incentive to buy newly built homes when they can purchase distressed houses, which have made up about a third of existing home sales this year, at a discount.
That means there will be little reason to build new homes next year, said Meyer. About 8 million distressed homes are in the pipeline to be sold over the next four years, including foreclosures and short-sales, according to Bank of America estimates.
Which is the very definition of the downward spiral.
Bill,
ReplyDeleteWe're on the same page re. peak oil, the delusion that we can grow our way out of this economic contraction, the mendacity of our "leaders" etc. etc. But help me out with this one:
"Without a recovery in housing there is no real economic recovery."
Why?
Let's say peak oil didn't exist, there was an idle but otherwise fully functioning manufacturing sector, people and governments weren't in hopeless debt, on and on. Why is housing a key to recovery (whatever that means)?
Or are you using housing as a key INDICATOR?
@Patrick - you are right, thanks for clarifying...it is a key INDICATOR. Though some might say that since the housing bubble was blown in order to make working and middle class people whose wages had been essentially stagnant for 30 years FEEL wealthier ( and not incidentally use their homes as "ATMs") and thus spend money and boost the economy.
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