Wednesday, February 29, 2012

Economy: Weighing Anchor

The recovery of the U.S. economy is painstakingly slow and disappointing. The magazine "the Atlantic" has a plausible explanation for this: “The recovery has been a drag because housing has provided a monstrous anchor, dragging down construction, local tax revenues, service jobs, entrepreneurship, credit availability and overall spending” ( But now it seems that the economy is weighing this anchor.

This morning Toll Brothers, a builder of luxury homes, gave a encouraging statement (cnbc). CEO Douglas Yearly told CNBC he sees "improvement everywhere", adding that his company feels "the best" it has in five years. Yearly also sayed orders were up 43% in the first three weeks of February.
 This fit the recent data from the housing sector (, for instance,  rising existing-home sales (

It looks like that the housing sector is coming back. This could create new jobs in the construction industry and therefore more income. This also could reanimate weak house prices which would revalue the wealth of the home owners. Both could translate in more consumer spending.

These positive effects should at least compensate the negative effect of high gasoline prices, which suck a lot money out of the U.S. economy. The recovery of the housing sector could make the economic upswing, now driven by growing manufacturing thanks to rising exports, more sustainable.

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