In economics, the multiplier effect refers to the impact of one industry sector on other industry sectors. In the United States (and many other countries), the housing industry has a HUGE effect on other industries. That’s why the depressed housing market was such a major contributor to our Great Recession.
As such, a recent story in the Wall Street Journal by Kate Linebaugh and James R. Hagerty really is much-needed good news: “Companies that sell power tools, air conditioners, carpet fibers, furniture, and cement mixers are reporting stronger sales, providing further evidence that a turnaround in the housing market is taking hold. The results add to data on home construction and pricing that indicate a bottom may have been reached after the sector’s long slide. While the incoming data continue to be mixed, evidence that Americans are spending more to build and refurbish homes is raising executives’ confidence that the housing market will continue to improve and help fuel the broader economy.”
Click the image to read more of the WSJ story.
Graphic by Rob Shepperson