Housing starts (and permits) have been a long-term key performance indicator for the economic stability and strength of Main Street USA for generations. Across all key metrics, the economics of middle-class America is defined by confidence in housing. A strong housing market reflects worker/purchaser confidence in their economic position.
The U.S. Commerce Department reports today that U.S. housing starts and permits has reached a 12-year-high. [data here] This is a key point because it cuts to the heart of the difference between a thriving Main Street economy and the disconnect surrounding issues with Wall Street (multinational) financial markets.
WASHINGTON (Reuters) – U.S. homebuilding surged to more than a 12-year high in August as both single- and multi-family housing construction accelerated, suggesting that lower mortgage rates were finally providing a boost to the struggling housing market.
The report from the Commerce Department on Wednesday also showed permits for future home construction rose to levels last seen in 2007. Housing and manufacturing have been the weak spots in the economy, which is now in its 11th year of expansion, the longest in history.
The jump in home-building activity last month added to strong retail sales data in suggesting the economy continues to grow moderately and is probably not flirting with a recession as has been flagged by financial markets. (read more)
Housing lags behind other jumps in retail sales because housing is the biggest financial commitment made by U.S. workers. A new home purchase, first purchase or upgrade, is the biggest decision for most American workers and families. Since President Trump took office wages and worker benefits have increased substantially; more than a million people have now moved into the middle-class.
Again, for emphasis, there are two distinct economic metrics that are disconnected and intentionally conflated by Wall Street pundits, financial media and political opportunists therein who speak through the prism of economics. The Main Street economy is thriving; the Wall Street financial economy -heavily influenced by multinational investment- is not thriving.
The two economic engines (Wall St. -vs- Main St.) were decoupled by corporate political influence, over U.S. economic policy, 30-years ago. Wall Street is a paper financial market influenced by U.S. multinational interests. Main Street is a blue-collar market influenced by the internal strength of the U.S. consumer, workers, wages and internal U.S. dynamics.
President Trump’s MAGAnomic policy is structured to the benefit of Main Street. Real investment by domestic companies providing American jobs taking place inside the U.S. The results of focusing on America First, generates more domestic jobs, a larger demand for U.S. workers, pressure on higher wages & subsequent increased consumer spending. Homes and home purchases are an outcome of that internal economic strength.
The global market can, and likely will, retract. The gains or losses of investment markets are not necessarily attached to Main Street outcomes. Wall Street overseas investments have less value when economic policy directs majority benefit to Main Street. However, isolated from the external investment issue, the U.S. Main Street economy can simultaneously thrive due to growth internally within the domestic U.S. economy.