This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Why Housing Starts Are Even Worse Than They Look

NEW YORK (TheStreet) -- May's housing starts data may have missed forecasts by only 4% or so, but they fell about 20% short of what the economy needs for a truly robust jobs recovery.

The Census Bureau said Tuesday that builders broke ground on new homes at an annual clip of 1 million. That's better than last May's 915,000, but 7% below the results for April and 4% less than the 1.036 million mean forecast as reported by Econoday. 

That means that Tuesday's market will be driven by talk of the Federal Reserve having yet another reason to hold interest rates at super-low levels for even longer -- unless policy makers are distracted by today's inflation report that showed a pickup in prices.

But for Wednesday and beyond, the real tragedy of housing numbers like this is that they aren't strong enough to support a jobs recovery.

The economy -- read, the jobs market -- needs about 1.2 million housing starts a year to reach full employment, give or take the now-familiar arguments over work-force participation. Each new home started represents three to four new jobs (though with apartments, which accounted for slightly more than one-third of May's starts, the number is more like two jobs).

Another 200,000 starts a year, generating as much as 800,000 jobs, would bring unemployment under 6% by itself. The boost a 5.8% number would give consumer confidence would do most of the rest of the work of bringing joblessness to a very reasonable 5.5%.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $124.25 -0.14%
FB $81.66 -0.67%
GOOG $542.56 -0.99%
TSLA $187.59 -0.63%
YHOO $44.13 -0.69%


DOW 17,698.18 -77.94 -0.44%
S&P 500 2,059.69 -8.20 -0.40%
NASDAQ 4,880.2280 -20.6570 -0.42%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs