A few thoughts looking out a few years …
- Residential investment (RI) is the best leading indicator for the economy. This isn’t perfect – nothing is – but RI is usually a strong leading indicator for the business cycle. The slump in RI helped me call the 2007 recession correctly, and the lack of a recovery in residential investment is a key reason the recovery has been sluggish and choppy so far. Note: Residential investment, according to the Bureau of Economic Analysis (BEA), includes new single family structures, multifamily structures, home improvement, broker’s commissions, and a few minor categories.
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