Hmmm... possible interpretation also appears like the "crack" is no deeper than June and the business cycle (including residential construction, if mortgage rates continue to soften) is finding new traction. Seems like something to monitor, but not react to yet.
Layman here, but what's causing the slowdown in housing construction? Tight interest rates? How come that's not affected power, sewage etc. equally? Is that because those sectors are more driven by government instead of private spending?
And what's driving the resilience of the markets against such shocks; is that a larger portion of growth coming from other sectors?
I am concerned for most "westernized" nations, including US and Western Europe, where housing is tight and increasingly unaffordable for the lower to middle class. It's impossible to buy a modest house in any city of import on two modal incomes. It seems likely to me that the outcome will be some form of yield curve control on the long end to artificially drive these rates down, as not doing so will cause further enthusiasm for a populist leftist vote (which most rightists in power now would rather avoid). What do you think about this? I know you do not believe in long-term prognoses, but with the greying economies and ever growing debts, it seems we'll have to grow or inflate out of it. Fiscal austerity's not coming. So that's bad for bonds, USD, good for equities, bonds, crypto. And really bad for anyone without assets.
The big driver at the macro level is debt service burden vs NGDP growth. NGDP growth in particular has begun to slow, with a lot of that labor market driven.
Without a significant gap between debt service and NGDP, households (demand) and builders (output) both find it difficult to operate in this very leverage intensive space.
Good note on sewage etc— the most macro sensitive sector in construction is always residential— the rest just confirm the trend after it’s begun typically.
Affordability issues definitely come into play here— making the dynamics for the sector even harder. Not a good backdrop for housing!
Hmmm... possible interpretation also appears like the "crack" is no deeper than June and the business cycle (including residential construction, if mortgage rates continue to soften) is finding new traction. Seems like something to monitor, but not react to yet.
That’s exactly it. To be fair the sequential data is worsening— but agree on the big picture.
The main takeaway here is indeed that it’s concern, but not alarming.
Layman here, but what's causing the slowdown in housing construction? Tight interest rates? How come that's not affected power, sewage etc. equally? Is that because those sectors are more driven by government instead of private spending?
And what's driving the resilience of the markets against such shocks; is that a larger portion of growth coming from other sectors?
I am concerned for most "westernized" nations, including US and Western Europe, where housing is tight and increasingly unaffordable for the lower to middle class. It's impossible to buy a modest house in any city of import on two modal incomes. It seems likely to me that the outcome will be some form of yield curve control on the long end to artificially drive these rates down, as not doing so will cause further enthusiasm for a populist leftist vote (which most rightists in power now would rather avoid). What do you think about this? I know you do not believe in long-term prognoses, but with the greying economies and ever growing debts, it seems we'll have to grow or inflate out of it. Fiscal austerity's not coming. So that's bad for bonds, USD, good for equities, bonds, crypto. And really bad for anyone without assets.
All questions are welcome here!
The big driver at the macro level is debt service burden vs NGDP growth. NGDP growth in particular has begun to slow, with a lot of that labor market driven.
Without a significant gap between debt service and NGDP, households (demand) and builders (output) both find it difficult to operate in this very leverage intensive space.
Good note on sewage etc— the most macro sensitive sector in construction is always residential— the rest just confirm the trend after it’s begun typically.
Affordability issues definitely come into play here— making the dynamics for the sector even harder. Not a good backdrop for housing!