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Housing Market More Important Than Ever

12:00 AM, Mar 1, 2014 • By IRWIN M. STELZER
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My own view is that the effects of the bad weather ranged from nil in housing to significant in autos – perhaps because workers excused from showing up had time to trudge around looking at houses, but were not likely to test drive a new car in a foot of snow. And the effects will range from permanent to temporary: airlines are not likely to make up revenues lost due to cancellations of business and pleasure travel, or natural-gas-consuming industries to recover their higher costs, but the lust for a new garden hose or a beautifully painted house cannot be permanently cooled by a blizzard. Which is why the chief financial officer of Home Depot, Carol Tomé, guesses that at least some of the $100 million in weather-related lost sales in January will be made up in the spring when homeowners add the repair of snow damage to gardening, house painting and other chores.

In the end, much of the economy’s performance will depend on, among other things:

·     Consumers’ confidence, which dipped a bit last month but remains above the year-end 2013 level.

·     Consumers’ balance sheets, which are strong due to rising share and house prices and the paying down of debt.

·     The availability of credit both to consumers and businesses, which availability is increasing as banks become more confident that they will be repaid now that the worst of the recession is past.

·     The effect of Federal Reserve Board policy, which will continue to keep interest rates at growth-inducing levels, and I suppose.

·     The weather, with a sunny spring doing wonders for retailers.

As for housing, George Hunt, an analyst at Wells Fargo, put it best, “Growth has slowed to a more normal pace, and we expect the recovery [in the housing market] to continue for several more years.” Unless … but let’s hold that until next week’s job report. 

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