What to Expect from the Housing Recovery

By Joseph Lawler

Taking stock of the recent good news from the housing market, Jared Berstein warns not to expect too much of a boost to economic growth from rising sales and prices. He writes (in his headline) that housing was a huge headwind, and now it's a small tailwind, and adds: "don’t expect the kind of growth effects from the sector we had in the boom–it was a bubble, and who’d want to go through that again?"

He also presents this chart from Goldman Sachs, illustrating to the Gross Domestic Product impact of housing over the past few years:

Dean Baker has previously explained why we shouldn't expect more than a modest boost from housing in the near future. Basically, we don't want to return to the highs of the bubble. Returning to a merely normal housing market won't come close to filling the shortfall of demand for goods and services.

 

 

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.

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