Housing and the Economy: Is It different This Time?

By the old rules, we should already be in a recession.

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Economist Ed Yardeni notes how resilient the economy has become despite housing problems:

In the past, whenever residential investment dropped by 10 percent or more on a [year-over-year] basis, the overall economy was also in a recession. During Q3, the housing component of real GDP was down 16.4% y/y, yet the overall economy is growing rapidly. Real GDP is up 2.6% y/y, and 3.6% excluding residential investment.... While the Doomsters have been right about the severity of the housing recession, they’ve been wrong so far about it spilling over to the broad economy. Their big miss has been the impact of the global boom on boosting exports.