Economic analyses that do not factor in what’s happening in the real estate market have proved to be vacuous in the extreme. This is why 99% of all economic forecasts are wrong. As the director of the Land Values Research Group showed yesterday: “It’s the housing crash, stoopid.”
ps. STOP PRESS
The GDP figure was released today after I posted the above. Dr Gavin Putland was proven correct – although he admits he believed the decline in growth may have been even worse.
Yes i notcied Goldmans said there was a very large statistical error, which made private demand look really straong it could have come in much worse. Maybe when the revised figures come out it will show the real situation.
I dont know anyone in business that says domestic demand is powering along as figures would indicate. How can mortgage arrears be at 15yr highs but people saving and spending more ?
There’s less spending and greater saving happening because growth in property prices has stalled, Steve. It aint all the natural disasters, as much as the analysts say it is. But you’re correct, GDP will worsen as residential real estate sales decline and prices correct even more.
I too was expecting a bigger hit to GDP today. Most of the damage seems to have been done due to the floods and reduction in exports. Does that mean the next qtr will be negative due to housing/consumption ?
Cheers
Steve