Why has this “recovery” been so mediocre, and perhaps even verging on ending?
In a speech given late last month in Sweden, Eric S. Rosengren of the Boston Fed took a deep look at the impact of housing weakness on the US economy.
Although everyone knows that housing has been a problem, the impact may be more stark than you realise.
For example, this chart shows: Growth in Real GDP Components: Current and Three Previous Recoveries
Note that outside of residential fixed investment (and also government, though to a much lesser degree) the recovery looks like a pretty normal one. Business Fixed Investment is actually a larger share of the recovery than previous ones have been.
Rosengren’s presentation also looks at the impact of housing on wealth, including some breakdowns by ethnicity that we hadn’t seen before.
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