Kash at Angry Bear takes at look at yesterday's report on October housing starts and declares "Housing Boom, RIP." The story is covered by Ben Jones and Barry Ritholtz as well. But The Skeptical Speculator is the only commentator I found in my quick review who also highlighted this news, which I relay from Bloomberg:
U.S. industrial production rose 0.9 percent in October, the most in 16 months, as manufacturers recovered from the Gulf Coast hurricanes and a strike ended at Boeing Co., a Federal Reserve report showed.
The rise in output at factories, mines and utilities followed a 1.5 percent decline in September, the Federal Reserve said today in Washington. Factory output rose the most in six years. The proportion of industrial capacity in use rose to 79.5 percent from 78.9 percent a month earlier...
"This is partly a rebound from the hurricane effects, but there's also real demand out there and companies are rebuilding inventories,'' Robert Mellman, an economist at JPMorgan Chase Bank in New York, said before the report. "Exports and capital spending are holding up well, so it looks like we'll have a run of strong industrial production growth for a little while.''
What does that mean? Well, maybe nothing. macroblog has long admonished the faithful that a month's data does not a trend make. But if caution is called for in interpreting industrial production reports that are likely still distorted by the aftermath of the late-summer hurricanes, it is equally true that it is not time to get too carried away with the October housing starts. Consider this picture from Barry Ritholtz:
If you see a clear end to a boom in that picture, your imagination is a lot better than mine.
Folks, of course, are looking at more than just the housing start data -- as ably reported at Calculated Risk. But it will serve us well to recall that the economy does consist of more than the housing market, and that a fall-off in housing-related production does not necessarily imply a fall-off in production for the entire economy. It is always the case that economic activity in some sectors is waning, and others waxing. What might replace residential construction? I don't know, but I am tempted to invoke the immortal words of Roseanne Rosannadanna: It's always something.
UPDATE: Calculated Risk, writing at Angry Bear, also suggests that "Rumors of the housing market's demise are probably premature."