Does housing drive state-level job growth? Building permits and consumer expectations forecast a state’s economic activityJournal of Urban Economics, 2013, vol. 73, issue 1, 77-93 Abstract: National and state-level building permits significantly lead economic activity in nearly all US states over the past three decades, and produce substantially more accurate out-of-sample forecasts of state-level job and income growth than other traditional indicators including the leading indicator index, housing prices and wealth. We demonstrate that building permits have substantially declined before every recession since 1970, and that differences in permits across states before the last seven recessions explain the relative severity of a state’s job and income losses during these recessions. Hence, we can use permits to predict which states will suffer the greatest job losses in a recession. We show further that housing reflects expectations of future economic activity as permits are closely related to movements in consumer expectations, and both lead the business cycle by four quarters. Differences across regions in consumer expectations and permits are also highly correlated, and both can forecast interstate differentials in job and income losses across regions, particularly during recessions. Keywords: C53; E32; R11; Housing; Job growth; Forecasting; Business cycles (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:73:y:2013:i:1:p:77-93 DOI: 10.1016/j.jue.2012.07.005 Access Statistics for this article Journal of Urban Economics is currently edited by S.S. Rosenthal and W.C. Strange More articles in Journal of Urban Economics from Elsevier |
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