From the GS research group, a handy chart showing the impact of housing on real GDP growth, broken down into three parts:
–investment in homes, a component of GDP, so this impact is direct;
–the impact of housing wealth on consumer spending;
–the impact of mortgage equity withdrawal on consumer spending.
A few observations:
–housing’s subtractions from GDP during the bust were really large; in ’09 each component was sucking almost of point from GDP growth;
–don’t expect the kind of growth effects from the sector we had in the boom–it was a bubble, and who’d want to go through that again?
–it does sort of look like we lost more in the bust than we gained in the boom, but that’s at least in part because the busts are more concentrated in terms of time relative to the bubble;
–these estimates do not include spillover effects, like the impact on the construction boom on the job market or the impact on bank balance sheets–the latter has, of course, been a big factor in the length of the downturn and the difficulty in pulling out of it; housing busts are particularly pernicious in that regard as banks can “extend and pretend” regarding their valuation of non-performing loans.