Tags: housing | market | economic | growth

Applied Global Macro Research Sees 4 Percent Growth in 2014-15

By Dan Weil   |   Tuesday, 18 Feb 2014 03:27 PM

Economists at Applied Global Macro Research think a strong housing sector will propel the economy to 4 percent growth this year and next.

That's far above what most other economists expect. The consensus of 50 forecasters in the Feb. 10 Blue Chip Economic Indicators report was for 2.7 percent growth in 2014 and 3 percent in 2015, according to Barron's.

Pent-up demand will lift the housing sector, the Applied Global economists tell the weekly newspaper. And the sector's boom will have a strong impact on consumer spending, they say.

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Americans can expect an increase in housing investment, a rise in purchases of home-related goods and a gain in consumer spending overall sparked by rising home values, the economists say.

"We can't overstate the importance of housing," Applied Global President Jason Benderly told Barron's. "The housing cycle is likely to boost economic growth for some time to come."

Rising wages also will push consumer spending higher, the economists say. And the economy will benefit from less fiscal austerity and increased investment in equipment that will result from the increase in consumption, they say.

The housing sector has shown signs of weakness in recent weeks, though some economists attribute that to the brutal winter weather in much of the nation.

The National Association of Home Builders reported Tuesday that its Housing Market Index plunged 10 points to 46 in February, the largest one-month drop ever.

"This report will keep alive concerns in the markets that the weakening in the data recently is not just due to weather," Jim O'Sullivan, an economist at High Frequency Economics, told Reuters.

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