Thursday, January 19, 2012
December housing starts were less than expected (657K vs. 680K), and were 70% below their early-2006 peak; a pessimist would say that's pretty grim. But an optimist like me is quick to note that last year housing starts rose by a very impressive 25%. The big housing bust that began in early 2006 likely ended about a year ago—5 long years of terrible destruction for the residential construction industry. But it's over, finally.
For all those who have been saying that we'll never get a decent recovery until the housing market starts improving, your time to turn optimistic about the future has come.
For all those who say that those on the right of the political spectrum are hoping for a lousy economy so that Obama can be forced out, I want to emphasize once again that I think the economy is improving not because of anything Washington is doing but rather in spite of all the things that Washington has been doing to try to help. As I said in my forecast for 2012, "Left to its own devices, and given enough time to adjust to adversity, the U.S. economy is perfectly capable of growing—and that is what is happening now. No reason this can't continue." This is an organic recovery, if you will. The U.S. economy is by nature dynamic; it never pays to underestimate it. The economy will probably be doing a little better come November, but I suspect that Obama will find it difficult to turn that to his advantage. Unemployment is still going to be high, the deficit will still be gigantic, gasoline prices will be high, the dollar will still be relatively weak, and government's presence in our midst will still be oppressive.
Posted by Scott Grannis at 8:48 AM