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Housing and the GDP: A fairytale ending?

Marketplace Staff Oct 29, 2010
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Housing and the GDP: A fairytale ending?

Marketplace Staff Oct 29, 2010
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TEXT OF STORY

STEVE CHIOTAKIS: Today’s gross domestic product, or GDP reading of 2 percent is a little less than analysts were expecting. Marketplace’s Nancy Marshall Genzer reports today’s GDP number may not be something out of a fairy tale number — but it might have a happy ending.


NANCY MARSHALL GENZER: The 2 percent growth rate was about what economists expected. We’re in a kind of Goldilocks economy. Growth is not too hot, not too cold. But unfortunately, not the right temperature to create jobs. That’s partly because of a bear market for housing. Housing usually leads the way in an economic recovery. People buy homes. And new stuff to put in them. That consumer spending creates new jobs. You get the picture. But it’s not happening that way this time. Economist Joel Naroff of Naroff Economic Advisers says, be patient. He says it’s not about the three bears. Instead, think about the tortoise and the hare. This is a tortoise economy. Which will eventually get to the finish line. Naroff says, sometime in the second half of next year.

JOEL NAROFF: Housing will have improved over another year. The finance sector will have improved. And finally, and maybe most importantly, household confidence will improve.

Naroff is predicting a very strong recovery for the second half of next year. As workers start to feel that confidence.

In Washington, I’m Nancy Marshall Genzer for Marketplace.

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