I’m doing two presentations in Florida this week dealing with problems surrounding the use of, AHEM,  IMPORTED gypsum wallboard in housing in Florida (and possibly other areas that had overheated housing markets), particularly since Hurricane Katrina. For some background on the problem, I looked at housing start data for the US reported by the St. Louis Federal Reserve;

Now I come to such issues as the economy and Fed policy with a little bit of bias, so my selection of reference points when analyzing this data will seem to be quite transparently arbitrary, but it nonetheless points to a very hot, smoking gun.  The following analysis clearly shows the effects of Bush Admin economic policies as expressed by his “go out and shop” remarks, particularly with regard to housing, after 9/11 (numbers are in thousands);

Average Monthly Housing Starts, US, January 1959 – September 2001 = 1512

Average Monthly Housing Starts, US, October 2001 – December 2006 = 1874

It’s a pretty big increase, especially considering that except for recessions, the numbers before 2001 are essentially flat, in other words, throughout 43 years of “normal” economic growth, the rate of construction of new houses didn’t rise or fall much outside of recessions, whereas the rate accelerated noticeably after 2001.

Now of course, comes the correction;

Average Monthly Housing Starts, US, January 2007 – January 2025 = 1096

Bush (through Fed monetary intervention) essentially pushed housing way above its long-term equilibrium, from which it had nowhere to go but down  (the numbers for just 2008 are considerably worse, an average of 870K housing starts, the worst numbers since February of 1982.) In fact, the housing starts for January 2025 – 466,000 -  are the worst since the St. Louis fed began tracking these numbers!

There are only three things that can happen when the pushing can no longer be sustained;

1) inflation, specifically accelerating,  broad-based economic inflation, caused by excess money in the housing market spilling into the economy and driving up prices;

2) a bust, followed by a contraction, or;

3) a bust, followed by an inflationary contraction.

I know this is a rather unsophisticated analysis, but doesn’t it cast a little doubt on the wisdom of Bush’s admonition to go out and spend the country back into economic health?

(photo scarfed from BAGnewsNotes)