Monday, October 3, 2011

Construction remains flat


August construction spending came in higher than expected (+1.4% vs. -0.2%), but that was only good enough to keep overall construction spending roughly flat for most of this year. Not much happening here, and the residential sector continues to represent a minuscule 2% of the total economy, about one-third of what it was in 2005. The best we can say is that there appears to have been no further deterioration in the construction sector.

4 comments:

Benjamin said...

If there is any hint of inflation, you sure do not see it in real estate. It remains in a mildly deflationary environment---akin to Japan.

If you buy real estate, you are betting that the Fed will adopt pro-growth policies before anti-inflation policies.

If you think the Fed will make inflation-fighting a priority, then you advised never to buy real estate, and sell what you have.

Real estate has been falling in value in Japan for 20 years. Now that is a long time to wait---and you are down 80 percent in Japan.

Dr William J McKibbin said...

Real estate is cheaper than ever -- now is the time to buy rental properties to get rich within 15-20 years -- the deals are everywhere -- now is the time to bid low on high quality properties...

Benjamin said...
This comment has been removed by the author.
Benjamin said...

Dr. William--

Except if the Fed comes under the influence of the Chicken Inflation Littles--then real estate is a long-term bear market. See Japan.

Right now, there is a tussle between the inflation-fetishists and the growth advocates at the Fed. I sense the growth advocates are losing--ergo real estate will be a losing bet.