The Problem with Housing Starts: Why we need new national economic metrics

housing starts measures

The Problem with Housing Starts: Why we need new national economic metrics

Toward new national economic metrics: Housing starts (New residential construction) and foreclosures offer insight into the current economic malaise in the United States. They also reflect an ingrained view of consumption measures as the yardstick for economic health. Our measurement system is driving us to establish conditions similar to those before the recession.

If we just take housing starts, we have a measure that reflects not just the willingness and desire of American’s to own homes and the property that surrounds them, but also the ancillary dollars spent outfitting those homes. With horribly tight credit, any under-qualified borrowers will unlikely require a huge down payment on any new home. Homeownership is an area of stress, especially in a de-leveraging economy. The measure does not reflect the current mode of conservative cash positions.

In the current climate, the most healthy indicator may be the continued resistance of individuals to bite off more than they can chew. We should be seeing this as a positive move toward a more sustainable economy, one less prone to bubbles and bursts. If we are looking for positive homeownership metrics, we should be looking at:

  • Lower requests for second mortgages
  • Investments in energy reduction for existing homes, along with actual lower use of energy in homes
  • Basic investments in home maintenance (paint, rust, plumping repair, etc.)
  • Re-sale home value

This is just one example of how our national strategy continues to reflect the industrial age proclivity for consumption. We know that consumption-based economics lead the cycles of boom and bust. Sustainable economic models would be less volatile.

We won’t get to a new economic platform overnight, but we will never get there if we don’t start modifying what we measure and define what economic success looks like.  Does success look like the return of low wage manufacturing jobs from China, or new high wage knowledge economy jobs fueled by innovation and the reinvention of education? We may have to navigate our futures, but we do influence our short term destiny by choosing what we think is important, and making those choices even more important by tying our national health to the measurement of those factors. If we want an innovative future, we need to start measuring the positive change in attitudes rather than the metrics that defined success in the 1930s and 40s.


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Daniel W. Rasmus

Daniel W. Rasmus, Founder and Principal Analyst of Serious Insights, is an internationally recognized speaker on the future of work and education. He is the author of several books, including Listening to the Future and Management by Design.

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