There’s been a lot of talk lately about an impending economic recession, one that would cause a slowdown or correction in the U.S. home building industry.
Nothing I’ve read is predicting a repeat of what happened a decade ago, but the indicators are there to at least legitimize the chatter: escalating trade tariffs with China; a federal deficit approaching $1 trillion; an über-sensitive stock market; and the dreaded Treasury bond yield curve inversion. Even housing affordability is getting some ink.
But if you’re worried, as certain federal leaders are, that we (meaning the media, including some Pro Builder columnists) are talking ourselves into a recession, I urge you to step back and consider history.
First, in a capitalist (or close enough) economy, corrections are inevitable and cyclical. Since I started reporting on the housing industry, I’ve experienced a half-dozen economic peaks and valleys of various severity affecting our segment and the economy at large, the bigger ones punctuated by a desire to grow too quickly and without proper controls (think, the Savings & Loan crisis of the early 1990s, the dot-com crash of the early 2000s, and the subprime mortgage market collapse in 2008).
That it’s been more than 10 years since the start of the last impactful recession speaks to where we started (about as low as you can go) and to the relatively measured (read, more sustainable) economic growth since, which has extended the current cycle. It’s actually an anomaly and lacks a singular big trigger to cause a dramatic shift in the status quo. But that doesn’t mean the cycle won’t continue, and sooner than later.
Second, when it comes to media coverage of current economic realities and the prospect of a recession, consider that very few members of the press—general or housing-specific—were ahead of the subprime mortgage fiasco in the mid-aughts; in fact, I remember a colleague deriding the “myth” of any housing bubble at the time, convinced that everything was hunky-dory and builders had nothing to worry about for the foreseeable future. It was like Major League Baseball and steroid use or the NFL and concussions: The evidence was there, and almost everyone chose to ignore it. Give the media credit this time: At least we’re not silent or, worse, in denial or complicit with those dismissing the possibility.
No one—not the media, not economic experts, not pundits on any side of any aisle—can or will talk us into a recession. It’s gonna happen. The question is, do you believe history enough to get ready?
Access a PDF of this article in Professional Builder's October 2019 digital edition
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