The stock market which rose by more than one percent on the 18th on the news that the Federal Reserve was not going to start tapering in September, gave up all of its gains and then some on the newer news that we may be facing a government shutdown next week and then yet again another battle over the debt ceiling in a couple weeks after that. As of this taping the Dow Jones Industrial Average has lost around 3% from its September 18th close.
The last federal government shutdown in 1995 cost more than 1.2 billion dollars, and of course you know who paid the price, we the tax payers!

Ok, now let’s turn to something less depressing, as if that is possible for economists!!

In this case, there is an exception;

The Lehigh Valley’s housing market has been doing fairly well lately and the outlook is even more encouraging. One of the most important indicators of the housing market is sales volume, during the last housing boom, sales volume reached 9,000 units a year in the Valley. The Great Recession cut that into half.

At the height of the housing market, in 2005-2006, the level of monthly transaction in the Valley exceeded 160 million dollars. During the Great Recession housing demand dropped to less than 80 million dollars a month, a huge drop.

So where is the good news?

The facts show that the Valley’s housing market has shown significant recovery, and volume of sale has now exceeded 6,000 units a year, which is a lot more in line with the historical sales volumes for the Valley than the over heated 9,000 ever was.

Now, all this is about looking in the rear view mirror, this is all in the past, what about the future? Well let me share a trade secret with you, economists are great in analyzing what happened, what is going to happen, is a different story, however, that technicality has rarely prevented us from making forecasts!!

For the Lehigh Valley I have used three basic indicators to forecast the future of the housing market in the last two decades, the short term indicator, 3 to 6 months ahead, is yet to show any upward enthusiasm, the medium term indicator, 9 to 12 months ahead, is moving up from its lows and is showing some life. The long term indicator, more than 12 months hence, on the other hand, is showing significant increases. This simply means that the Valley’s housing market will show real improvement by the end of next summer.

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