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Deutsche Bank’s economists are turning bullish on the US output growth in 2013. They believe that improvements in US home construction (see discussion) will have a multiplier effect – even though construction by itself accounts for only 1% of the GDP. And they are seeing some of this multiplier effect in today’s consumer sales numbers.
DB: – … residential housing has a large multiplier as evidenced by improving sales of furniture and building materials—the former was up 0.4% and has increased three months in a row while spending on the latter has been even more robust, with sales up 1.1% in September and nearly +21% over the previous three months.
The recent spike in builders’ sentiment (see discussion) is an indication of improvements in housing starts – an index that is reported on a lag. According to DB, if Europe remains relatively stable and the US fiscal cliff is dealt with (both big “ifs”), next year’s growth should be stronger than many expect.
DB: – Rising builders’ sentiment coupled with higher starts and faster retail sales tell us that the economy is unlikely to slow further and that overall growth may noticeably improve sometime next year if the fiscal situation is properly dealt with.
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| Source: DB (click to enlarge) |
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