The Role of Housing in Our Economy
There are many indicators that our recovery from the Great Recession is on the upswing and the housing market plays a major role in this. Standard & Poor’s 500 closed recently one point away from the all-time high from October 2007. But that is only interesting to approximately 53% of Americans who are in the stock market. According to a 2012 Gallup poll, this is the lowest number since Gallup started tracking this number. A lot of people are not that confident in the stock market . . . another interesting statistic is close to 100% of Americans live inside. I haven’t verified this data but, I’m pretty confident. That is one reason the housing market is such a good indicator of our economy.
According to an Associated Press article in Time Business & Money,” Housing, Manufacturing Give U.S. Economy a Lift”, the continuing positive trend of the housing market nationwide has large repercussions. Home prices are still below their inflated peak in 2009 but the direction they are headed is quite positive.
The trickle-down effect of the housing market spreads into our economy as a whole. When consumers feel their homes are worth more, then more people put their home on the market and more people buy homes. With the increase in the value of their homes, people feel wealthier and will spend more. Once consumers spend more – manufacturing increases. According to the AP article, a Commerce report indicated an increase in manufacturing on durable goods including an increase demand for motor vehicles and parts.
Homes are worth more so people can spend more. Demand for homes and goods are on the rise which creates jobs. In February 2013, the unemployment rate was at a four-year low.
Your home value isn’t the only indicator that drives our economy but it can be considered one of the foundations (no pun intended.) There still of course are a few worrisome things hovering like the government budget, taxes, and the world economy. Everything is connected, we’ll see what our future brings but it is looking bright.
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