Well, by a lot of indications, the economy, however you want to describe it, is about to be hobbled.
We’ve got PPACA kicking in, we’ve got whatever the admin does about the debt ceiling, we’ve got an Obama admin budget coming, etc...
We still seem to have a low workforce participation rate, we’ve got the swelling welfare and disability rolls, etc.
It’s also hard to believe there are going to be a lot of folks buying houses...
As I’ve said, Obama’s regulations are stifling growth and 2% is very poor but we’ve been at that rate for a while. It’s just not going to get better.
As for housing the key is household formation. Average housing starts of 1.5 million over the last 50 years are made up of 1.2 million new households formed per year and 300K teardowns, second homes, fires, floods, etc. Household formation during the recession dropped to 255K in 2009 and 444K in 2010 which delayed any housing recovery and why we saw 600K starts during those years. Household formation increased to 961K in 2011 and was 1.4 million so we are getting back to a “normal range”. As housing analysts say, “those people have to live somewhere” which is why inventories and vacancy rates have declined to normal ranges.
As an FYI I do FP&A and economic forecasting for my company and we participate in the housing sector.