The most bullish development on the entire globe has to be US housing, and that’s most exemplified by today’s housing starts number, which crushed expectations.On an annualized basis, starts came in at 872K vs. expectations of 772K, rising 15%.
Millan Mulraine of TD Securities writes that the report is so good, it will boost US GDP
This report is exceptionally bullish on the housing market recovery, and the surge in construction activity is consistent with the surge in homebuilders’ confidence about the sector. Not only were the gains broadly based across building categories, but the surge in building intentions suggests that the current pace of construction activity could be sustained. There is hardly a wrinkle that could be discerned in this report. From a GDP perspective, the report points to further upside support from residential construction to economic activity in Q3, and the rebound in construction will also help the labour market recovery in absorbing some of the 2.2 million construction workers that have been displaced during the housing sector downturn.
It’s hard to think of a bigger bullish trend right now, at least in the short term.
In the long term, of course, fixing Europe and the ongoing development of emerging markets means a lot more.
But at a time when everything is slowing, having the biggest asset of US consumers on the rise (both in terms of sales and prices), throwing off all sorts of new jobs and a wealth effect is just huge.
For the US economy: It’s strong housing vs. weak everything else.