The economy apparently doesnâ€™t realize this is a season of giving. The latest data present us with two major Grinches. 1) the 0.5% GDP decline in the third quarter has been confirmed and some expect as much as a 6.0% GDP decline in the fourth quarter. 2) Median home prices have suffered the worst decline since the Great Depression as existing home sales dropped 8.6% last month.
What worries me about the duel problems of a recession and a collapsing housing market is that our recovery will be hampered by our workforceâ€™s immobility. If people are stuck in homes they canâ€™t afford to sell, they canâ€™t follow the jobs. And if new industries canâ€™t attract the right labor, they wonâ€™t grow as quickly or may not succeed at all.
This worry is overly negative to be sure, but I do believe that a dynamic, mobile workforce is the key to our success in the global marketplace. When we as a culture started treating one of our most essential commodities (the abundance of quality, reasonably priced housing) as a get-rich-quick investment, we did more than wreck the banking industry. We wounded one of the great advantages of American existence: the ability to get up and go where the money is.
We will recover, but the combination of a recession and a poor housing market will make turning the economy around all the more difficult.
This entry was posted on Tuesday, December 23rd, 2008 and is filed under Economy, Housing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.