Top of the News: The only ones caught short by the “unexpected” nosedive in new house permits are people who haven’t been paying attention.
Sprawl housing construction became the major manufacturing sector in the 2000s as much of the rest of the productive economy was hollowed out. But it rested on consumers taking on unsustainable amounts of debt in tandem with the “creative” financial activities and swindles on Wall Street (and WaMu). That’s all gone now.
Americans still face record debt levels and mortgage requirements have been tightened. More subprime mortgages will reset in 2010, and banks continue to be saddled with huge real-estate toxic asserts. Big house-builders are still badly wounded and holding huge inventories of unsold properties, especially in the Sun Belt. Only the government’s first-time buyer credit created a mini-bubble thats now fading.
The recovery to “new normal” won’t come from another housing bubble.
Join me today at noon PST at seattletimes.com for a Q&A on the state of the jobs market. You can post questions here.
The Midweek Briefing: Call it peak oil or call it a higher-cost energy future, but it’s a fact of geology. The Oil Drum published a useful primer on the issue and its consequences.
–If you missed it, the New York Times‘ invaluable Gretchen Morgenson found the small print of the bill that extended unemployment benefits for 20 weeks. Hiding inside: a tidy bailout for house builders.
–Slate’s Daniel Gross challenges the conventional wisdom about the danger of the American economy mimicking Japan’s after 1989. We’ve already had out “lost decade,” he argues. For example, jobs in the U.S. are where they stood in 1999. The stock market went “precisely nowhere.”
–What Year is This? Dept.: Research from Jenny M. Hoobler and colleagues at the University of Illinois at Chicago show that bosses persist in the mistaken belief that women employees are more likely to have family-work conflicts, and pass them over for promotion.
Today’s Econ Haiku:
It’s just a little bit, right?
But will Ben worry?