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.


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...
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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.