Although that may be how much housing counts for in the GDP numbers, it is not necessarily how much housing counts for in the economy. Mark Skousen wrote a really nice book criticizing the use of aggregative statistics like GDP. It's called The Structure of Production, and in it Skousen argued that GDP focuses on the final goods/services industries while neglecting those industries that are higher up the structure of production. I hear guys like Robert Reich on TV say all the time that consumption represents something like 70% of the economy. Consumption represents 70% of the GDP numbers, this is true, but that does not mean it represents 70% of the economy. It's difficult to fully explain all the reasons why the GDP number tends to obfuscate on the true size of the US economy, so I recommend checking out the book. The capital goods industries are not fully accounted for in the GDP number, and Skousen encourages the use of another type of statistic (he calls it the Aggregate Production Structure or APS) to account more fully for the entire economy. Again the book is called The Structure of Production, and if anything it's useful in that he goes at length to chronicle the historical development of the ideas pertaining to how we take raw materials and fashion them into consumerable products. He goes from explaining Bohm-Bawerk and Mengers theory to those of Gustav Cassel, the mathematical economists, the Keynesians, and Frank Knight and John Bates Clark. Also, Skousen's theory is interesting because he refuses, unlike Keynesians, to neglect the time element and the heterogeneity of capital goods within the economy.
Wow! I would have guessed it was larger than that. Figure all the products manufactured for the home from faucets, countertops, appliances, to the logging, sawmills, shipping, then the trades to assemble the homes. I am also amazed at how small this market dip looks on that chart vs. how it is portrayed in the media..
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using this chart, looks like we have hit bottom. Time to buy rental properties.
Although that may be how much housing counts for in the GDP numbers, it is not necessarily how much housing counts for in the economy. Mark Skousen wrote a really nice book criticizing the use of aggregative statistics like GDP. It's called The Structure of Production, and in it Skousen argued that GDP focuses on the final goods/services industries while neglecting those industries that are higher up the structure of production. I hear guys like Robert Reich on TV say all the time that consumption represents something like 70% of the economy. Consumption represents 70% of the GDP numbers, this is true, but that does not mean it represents 70% of the economy. It's difficult to fully explain all the reasons why the GDP number tends to obfuscate on the true size of the US economy, so I recommend checking out the book. The capital goods industries are not fully accounted for in the GDP number, and Skousen encourages the use of another type of statistic (he calls it the Aggregate Production Structure or APS) to account more fully for the entire economy. Again the book is called The Structure of Production, and if anything it's useful in that he goes at length to chronicle the historical development of the ideas pertaining to how we take raw materials and fashion them into consumerable products. He goes from explaining Bohm-Bawerk and Mengers theory to those of Gustav Cassel, the mathematical economists, the Keynesians, and Frank Knight and John Bates Clark. Also, Skousen's theory is interesting because he refuses, unlike Keynesians, to neglect the time element and the heterogeneity of capital goods within the economy.
Wow! I would have guessed it was larger than that. Figure all the products manufactured for the home from faucets, countertops, appliances, to the logging, sawmills, shipping, then the trades to assemble the homes.
I am also amazed at how small this market dip looks on that chart vs. how it is portrayed in the media..
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