According to Goldman Sachs housing busts tend to have a particularly destructive impact on the labor market:
“This distinction matters, as we and others have shown before, because recoveries after housing busts follow a distinctive pattern. Most importantly, the rebound in growth tends to be more subdued than normal and it can take many years before unemployment rates fall (Chart 7). In essence, the pressure from the private sector adjustment and deleveraging tends to make it difficult to deliver the kind of strong growth that is needed to eat into spare capacity.”
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.