Wednesday, March 16, 2005

real estate and recessions

According to the UCLA Anderson Forecast, (covered in the LA Times) california's reliance on real estate to bolster the state's economy "is destined to cool down." The study examines the extent to which real estate is driving the growth in CA's economic recovery. For instance, half of the private-sector jobs created in CA in the past two year are related to the real estate industry, such as construction or mortgage finance. the study explains that CA has experienced a sharp increase in home equity, leading to more consumer spending that results in more economic growth. where does that leave us?

"We have an economy that's rolling along on the basis of a false sense of wealth," said Christopher Thornberg, a senior economist with the Anderson Forecast team.


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