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
3 Replies to “An Improved Housing Market Means Good Things for the Overall Economy”
It is great to see that the housing market is finally rebuilding itself from the ground up. The housing market played a major role in the collapse of thousands of banks across America and to see their recovery, it brings hope that other sectors that suffered from the bubble burst can too recover such as the unemployment rate as banks are more confident in the economy to soon shine again.
It is great to see that the economy is finally getting better. I think that this article is important because the fact that real estate is back on track is an excellent sign for the future. My mother is a real estate agent. After reading this article I have noticed that she has been doing extremely well over the past few months, and I guess it isn’t a coincidence.
It is encouraging to see the economy on an uprise. Even though our country was in a recession however, this did not stop many frivolous Americans from spending. I am personally acquainted with people who find their home to be their most prized possession, and rightly so. However, these people nickeled and dimed in order to sustain their lavish lifestyle while others were just fighting to stay afloat. Hopefully the rise in the economy and the housing market will instill hope in those less fortunate that there will be an end to their challenges and that they will finally be able to afford something as vital and important as a roof over their heads.