“Housing IS the Business Cycle”
Leamer further decomposes the above graph into residential investment the year leading up to a recession and the two year period following the start of recession. The years shown on the graph below are the year the recession began.
The graph shows, with few exceptions, that residential investment declines in the year leading up to a recession (top image) and has a “V” shaped recovery sometime during the two years following the start of a recession (bottom image).
Leamer’s work only goes through the first quarter of 2007. We update his analysis with the chart below showing the residential investment picture from 2007 through October, 2016 (most current data available). If Leamer is right that “housing is the business cycle,” the chart below gives us some confidence the business cycle has a positive trajectory today.
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Stock Market Dashboard
This commentary and a sampling of previous editions are available as PDFs:
4/13/2017: "Housing IS the Business Cycle"
4/7/2017: Bond Risk Rising with Rates
3/31/2017: Exclusive Stock Market, Higher Stock Price
3/24/2017: Indications of a Positive Stock Market Future
3/17/2017: Hallelujah, Reflation!
3/10/2017: Small Cap Stock Divergence
3/3/2017: Velocity Pivot Good for Stocks
2/24/2017: How Safe Are The Banks
2/17/2017: Climbing A Wall of Worry
2/10/2017: Value Shopper - Europe on Sale
2/3/2017: What, Me Worry
1/27/2017: Extraordinary Earnings Louder Than Trump
1/20/2017: It's Not All About Trump
12/30/2016: Predicting the Future -2017
12/2/2016: Trade What Is, Not What You Think It Should Be – 2017 Outlook
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