by Calculated Risk on 4/04/2006 11:31:00 PM

Neil Irwin writes in the WaPo: Is Reliance on Real Estate a Crack in the Foundation? Some Excerpts:

The U.S. economy is more dependent on housing than it has been in a half-century ...

... economists worry that the housing slowdown that began late last year could hurt the broader economy more than past real estate downturns, although other parts of the economy appear to be accelerating.

What makes the real estate boom of the past decade unusual is that its effects have reverberated far beyond closely related sectors such as construction, driving sales in places as varied as furniture stores and motorcycle showrooms ...
...
By almost any measure, the U.S. economy is built on housing more than in the past. In 2005, investment in housing constituted a higher proportion of the goods and services the nation produced than it has since 1950, when the nation was experiencing a massive postwar housing boom. The proportion of jobs in real-estate-related fields is the highest it has been since at least 1970.

Overall a very good summary article, however I think the following sentence is a little misleading:

Nationally, real-estate-related industries accounted for 74 percent of new jobs over the past five years.

The economy has added 2.2 million jobs over the last 5 years and the U.S. economy has probably added 1.6 million real estate related jobs during that period (74%). However, from the low in employment (Summer 2003), the economy has added almost 5 million jobs - so real estate would only be about 30% of those jobs - still extremely high, but not the 74% number mentioned in the article.

I definitely agree with the thrust of the article: a real estate slowdown will impact many seemingly unrelated industries.