Housing recovery bodes well for boating
Jonathan Sweet, Editor-in-Chief
September 19, 2012
Filed under Jonathan Sweet
One of the biggest drivers of spending during the early 2000s was housing. The “wealth effect” of rapidly rising home prices spurred people to buy new cars, new TVs and, yes, boats.
So it’s a good sign that housing is finally turning the corner and contributing positively to the economy. While it’s not the boom years (a good thing, considering the unsustainability of those skyrocketing prices), rising home prices will slowly increase consumer spending next year, Bank of America senior economist Michelle Meyer told Bloomberg:
Meyer predicts the wealth effect will add 0.1 percentage point to spending per quarter, swinging from a 0.9 percentage point drag at the height of the housing crisis in the first quarter of 2009. The contribution represents a long-awaited turning point at a time when a struggling labor market impedes wage growth and manufacturing provides less support for the three-year expansion.
Among the positive signs for housing this week:
- Housing starts in August were up 29.1 percent year-over-year
- August existing-home sales were up 9.3 percent from 2011 and inventory was down 18.2 percent which will help drive up prices
- Home builder confidence is at its highest level since June 2006
- Remodeling activity in July was up 15 percent from 2011.