Our Long-Awaited Construction Boom Still Isn’t Quite Here

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As you may recall, Smithian economics suggests that we’re due for a big rebound in housing construction and that this rebound will drive a strong economic recovery over the next few years. However, Karl Smith himself is starting to get pessimistic. Multi-unit housing starts are increasing, but they still look pretty anemic compared to past housing booms:

The “hopeful” argument is that while the absolute increase is much smaller this time around the pace is actually a bit faster, a four-fold increase rather than a 3-fold increase.

However, given the current conditions in housing I was looking for an even stronger snap back. This alone will not be enough to push the economy into a boom. We need a series step-up in the rate of growth.

What’s worse from a long run perspective is that the failure of multifamily to bounce back potentially sets up single family for a new bubble….That kind of instability is difficult to manage. Economic stabilization going forward would be better if there was a larger stock of multifamily rental housing, yet that is looking increasingly unlikely.

This might just be a temporary problem. Price-to-rent ratios are continuing to decline after a brief upward blip in 2009, which should make apartment construction increasingly attractive to developers. In the end, though, it’s all going to depend on the same virtuous circle that ends every recession: more jobs means more income, which means more homebuilding, which in turn produces more jobs, world without end. (For a few years, anyway.) But we’re still not producing enough new jobs to get all those 20-somethings to move out of their parents’ basements in big enough numbers, so the virtuous circle is having trouble really catching fire. More stimulus, please.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

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Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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