Mr. Powell, Tear Down This Housing Bubble!

Mr. Powell, Tear Down This Housing Bubble!

US housing starts and building permits fell in April, data out Wednesday showed. Markets are on high alert for signs of a slowdown in America's property market, which delivered a massive windfall to homeowners during the pandemic, as monetary largesse and an acute supply-demand imbalance drove stratospheric price gains. Starts fell to a 1.724 million annual rate last month, The Commerce Department said. That was slightly below the expected 1.756 million pace, but still elevated (figure below).
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6 thoughts on “Mr. Powell, Tear Down This Housing Bubble!

    1. Poor people may, indeed, be disenfranchised and discouraged and unable to perceive whether their vote counts. Remember Justice Anton Scalia, who famously wrote the Citizens United decision, wherein he asserted it was okay to allow a small group of wealthy donors and special interests to use dark money to influence elections, and that not allowing it would stifle their right to free speech?

      1. The Citizens United decision may prove to be what broke the political system of the United States. Not that things were exactly great prior to that ruling, but the situation is definitely devolving every election cycle. Poor and middle class voters are either disenfranchised or saddled with a decision to vote for the lesser of two evils. Neither is conducive to progress or moving away from the hyper polarized environment that has replaced community in the US.

  1. To your point, the Fed is attempting to clean up a mess of their own making. Housing , stock , bond, used car, crypto, and consumer goods inflation are all the result of their own monetary policies.

    Not that I expect Powell or anyone else in the FOMC to acknowledge this publicly, but considering it is obvious that they are the root cause of the inflation problem, is anyone doing a retro of the past 3 years over there to try to understand how to execute this better in the future? I doubt it.

    We live in a very long Groundhog Day situation now. The Fed creates and bursts bubbles over and over again and we get to watch the carnage through graphs on H’s blog.

  2. The rise in home prices is of course one of many factors possibly structurally affecting the workforce. Tragically, there have been 185,000 or so excess deaths in the 25-54 age group since the start of the pandemic, for instance. Likely much more significant from the standpoint of Labor Force Participation, and also tragic, is the difficult to estimate but undoubtedly large number of work force participation hours that have been lost due to workers suffering long Covid as this Brookings Institution report suggests:

  3. Thanks for that link. I think the rate of lingering disability from Covid is multiples of the rate of death from Covid, so with about 250K working age Americans dead it makes sense there’s likely >1MM working age Americans who are not dead but not able to work.

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