Why The Housing Bust Aftermath Means A V-Shaped Recovery Is Impossible This Year

From Caixin:

The U.S. economy will continue to be weighed down in 2010 by the after-effects of the bubble collapse in residential and non-residential real estate. This collapse, not the financial crisis that was sparked by the collapse, is the cause of the recession and the main factor suppressing growth. The fallout from the collapse of these bubbles virtually guarantees that 2010 will be a year of slow, and possibly negative, growth with 2011 offering little better prospects.

The impact of the housing bubble is fairly straightforward. The run-up in housing prices earlier in the decade led to record rates of housing construction. This led to enormous overbuilding. The country currently has an unprecedented level of vacant housing units.

Read the full article at Caixin –>

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