The chart above is that of Housing Starts expressed relatively to
the Labor Force. The latest datum, five, means that five houses
are being built per 1000 persons in the Labor Force.
It is widely accepted that the bursting of the Real Estate bubble
served as the catalyst for the deleveraging of the US economy.
The Consumer has reacted incontrovertibly...
Causing a worldwide collapse in demand as reflected in the price of
commodities...
Leading to the steepest drop in the most prevalent sector of the economy.
The latest casualty: Bond Market Bear.
Unless you believe that the largest decline in decades in Housing
Starts, Retail Sales, PPI and Service Employment is not real, then
you have to conclude that the latest casualty is justified.
But the genesis of the problem will not remain so:
Notice how the year-on-year percent change in Housing Starts is
at levels associated with turning points.
Also from the first chart above, note that in very little time,
there has been a decline from 15 houses built(per 1000 in the
Labor Force), to only five, for a drop of 66%.
Interestingly, major declines in the past have approached this number.
In the early 1970's a drop from 30 to 12 houses started/1000 LF.
In the late 1970's a drop from 22 to 8 houses started/1000 LF.
In the mid 1980's a drop form 18 to 7 houses started/1000 LF.
Low Housing Starts numbers will pave the ways for an eventual
absorption of inventories and a gradual recovery in Housing.
