As Published in the Fall 2012 Edition of NJ Lifestyle
The most recent recession (often dubbed “The Great Recession”) was the longest and most severe recession in the United States since The Great Depression in the 1920’s. Officially, the recession began in December 2007 and ended in June 2009, at which point the economy started to grow again. What has been concerning to so many is that usually by this stage of a ”recovery”, U.S. GDP would be growing at 4-6%, based on historical measures. Instead, the U.S. economy is barely generating 2% growth presently.
Although there are many factors contributing to this lackluster recovery, perhaps the largest factor has been the weak housing sector. It is, of course, intuitive that housing would be weak in a recovery following a recession that was caused by a “housing bubble.” The years leading up to 2007 were marked by excess housing construction, speculation, and poor lending practices. The excess housing supply created by the housing bubble has caused new home construction to slow down dramatically from historic averages. Over the last 40 years, the United States has produced, on an annual basis, approximately 1.5 million new housing starts. This number decreased all the way to 500,000 in 2010.