As housing prices go, public's verdict on economic policies follow

Posted Jun 9th 2008 6:42PM by Joseph Lazzaro
Filed under: Economic Data, Politics, Housing

Are public attitudes toward the U.S. government's economic policy linked to housing prices?

There are other factors involved, but over the past three decades there has been a correlation between the two conditions, The New York Times reported.

When home prices are rising at a pace moderately faster than inflation, consumers tend to think well of the U.S. Government's economic policies, The Times reported, citing Haver Analytics.

For example, during the U.S. housing market's two, prior housing booms, 1984-1987 during the Reagan Administration, and 1996-1998 during the Clinton Administration, consumers, on average, approved of the government's economic policies, The Times reported.

One outlying data point: During the 2001-2005 housing boom during the George W. Bush Administration, consumers were initially divided concerning whether the economic policies were appropriate, before turning decidedly negative, as evidence mounted indicating that the housing sector had fallen into a recession and that the U.S. economy was slowing, The Times reported.

Economic Analysis: As The Times noted, there could be other factors at work that explain the housing price/public approval relationship better: correlation does not prove causation. Public approval, (the dependent variable in social science terminology), could perhaps be better-explained by the U.S. economy's overall performance, or by the misery index (level of inflation, 30-year fixed mortgage interest rate, unemployment rate), or by corporate profit levels.

That said, causation demonstrated or not, no political party in control of the White House/executive branch would cite 'falling home prices as an issue in their favor' in a presidential election year.

Tags: Bill Clinton, Bush, Bush Administration, Clinton Administration, gdp, home prices, housing sector, median home prices, public opinion, Reagan, Reagan Administration, surveys, U.S. economy

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Reader Comments (Page 1 of 1)

6-09-2008 @ 11:32PM

Mike Sanders said...

This makes no sense to me... Lower housing costs are a good thing! What if you are a young couple trying to buy a home? All during the period of inflation, while I watched my home go up in value, they kept reassessing it and raising my property taxes, now $2000 per year! You say I can sell it for more money? So what, I'd have to buy another one and it would be inflated, too... Just a way to increase taxes, if you ask me. You say it's an "investment?" While it's a part of your net worth, your house is seperate from your investment capital. Why else would they say, "What is your net worth, excluding the house you live in," when you open a brokerage account? You live in a house, but you invest in stocks, CD's, mutual funds... Unless it's not your primary residence, i.e. rental property. Can someone explain why inflation of the price of buying a house is good? I don't cheer when gas prices go up, why should I be glad that it costs me more for a house and then, I get to pay more in taxes, besides... Somethings very wrong with this, but I honestly don't get it!

6-10-2008 @ 2:38AM

B. Harrison said...

Congressmen's "email newsletters" that address pork barrel or ear mark issues are NOT addressing the primary problems of the nation . . . YOU need to address the major issues:

a. The economy in regard to petroleum costs, and the subprime mortgage loan DEBACLE.

b. The UNWARRANTED WAR in Iraq . . . yeah once we became involved in it, it isn't easy to withdraw; but what about the BILLIONS of aid / reconstruction monies that are being skimmmed off; and what about the Iraqis responsibillities to do their part in reconstruction?

For the past 8 to 16 years Congress really hasn't don't anything about the energy problems except to use the problem as a basis and vehicle to issue UNWARRANTED SUBSIDIES, and TAX CREDITS/BREAKS to ALREADY WEALTHY special interests groups.

As we have seen, the use of food plants such as conr to produce ethanol is NOT as inexpensive or "clean" as was originally claimed; and it is driving up the costs of food products.

SUBSIDES and TAX CREDITS/BREAKS are NOT NEEDED for these programs. The Free Market Economy potential profits will provide the market incentives for these ventures . . . they don't need government "assistance" which is nothing more than "pay offs" for political campaign contributions. (i.e. the sugar industry, the Ganjuls/Domino Sugar.)

DRILL FOR OIL . . . that's part of the solution. If as you said, that the petroleum companies are "sitting on 330 MILLION ACRES of oil lease lands without developing it", then RESCIND the damn oil leases, and re-sell them to parties who WILL develop the oil resources in these 330 MILLION ACRES.

Congress has allowed the USA to become "captive customers" of the petroleum industry's conglomerates.

Use the Sherman Anti-Trust laws to break up these monopolitic conglomerates. And prosecute the CEOs and uppermanagement of these conglomerates for price fixing, market manipulations, etc.

This is an election year, and Congress needs to get off its dead butt and start working for the best interests of the nation and for "the people", not the special interests groupls.

You're either A. PART OF THE SOLUTION, or B. PART OF THE PROBLEM. Which is it?

Things are going to get a lot worse BEFORE the elections . . . and there ae going to be a lot of ANGRY VOTERS.

Either do something to help address the issues OR "get out of Congress . . . it's that simple.

And how about if the government clarifies how much oil deposits the USA REALLY HAS . . . there is too much confusion about these issues.