Exactly a year ago from today, one of us wrote a short piece entitled “Will Housing Save the U.S. Economy?” The conclusion was pessimistic: “we need to temper our optimism on what a housing recovery can do. I agree that house prices will continue to rise and new residential construction will steadily increase from its current very …
Great reads from Nick Timiraos over at the Wall Street Journal: Five Questions on the State of Mortgage Lending Mortgage Lenders Ease Rules for Home Buyers in Hunt for Business His central point is that the mortgage market is starting to direct credit toward lower credit quality buyers. We still think that the mortgage market …
New housing starts for March are out today. Rather than focus on the short-term movements, it’s worth looking at the long run. Here is the graph from calculatedriskblog.com: It’s really quite an amazing graph. We are now five full years from the end of the recession (if you buy NBER dating). And housing starts are still …
The Federal Reserve directly controls the short-term interest rate. But what it really tries to target is inflation and its expectations. The Fed’s goal is to achieve the target of 2% inflation in the long-term, and its preferred price index is the core personal consumption expenditure price index that excludes the volatile food and energy …
Alvin Hansen introduced the notion of “secular stagnation” in the 1930s. Hansen’s hypothesis has been brought back to life by Larry Summers in his November 2013 secular stagnation speech. The speech generated a huge amount of discussion, and for good reason. Summers’ provocative hypothesis is that the Great Recession was symptomatic of a longer-term problem: persistently inadequate demand that is evidenced by low …
News this morning shows that industrial output growth in China reached a 5-year low. What lies ahead for the Chinese economy? China’s economic growth over the last 15 years has been spectacular. But there is one aspect of Chinese growth more recently that merits concern: its increasing reliance on debt. Consider the graph below that plots …
