The U.S. housing bubble and bust: Impacts on employment

Monthly Labor Review

Volumn 133, Issue 12, 2010, Pages 3-17

  Byun, Kathryn J ^a  

^a BUREAU OF LABOR STATISTICS   (United States)

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EID: 78751498654     PISSN: 00981818     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (31)

1. For more discussion on comparisons of the current bubble-and-bust cycle in home prices to that of the Great Depression, see David C. Wheelock, "The Federal Response to Home Mortgage Distress: Lessons from the Great Depression," the Federal Reserve Bank of St. Louis Review, May/June 2008, pp. 133-48, on the Internet at http://research.stlouisfed.org/publications/review/08/05/Wheelock.pdf (visited July 14, 2010).
2. See Shayna M. Olesiuk and Kathy R. Kalser, "The Sand States: Anatomy of a Perfect Housing-Market Storm," on the Internet at www.fdic.gov/bank/analytical/quarterly/2009_vol3_1/AnatomyPerfectHousing.html (visited Dec. 1, 2010).
3. Ronald R. King, Vernon L. Smith, Arlington W. Williams, and Mark V. van Boening, "The Robustness of Bubbles and Crashes in Experimental Stock Markets," in Richard H. Day and Ping Chen, eds., Nonlinear Dynamics and Evolutionary Economics (New York, Oxford University Press).
4. "Residential investment" and "final demand for residential structures" are used interchangeably in this article
5. See James R. Hagerty, "Who's to Blame for the Housing Bubble?" The Wall Street Journal, WSJ Blogs, Nov. 16, 2009, on the Internet at http://blogs.wsj.com/developments/2009/11/16/whos-to-blame-for-the-housing-bubble/ (visited Dec. 1, 2010).
6. See Dean Baker, "East Asia's economic revenge," guardian.co.uk, on the Internet at www.guardian.co.uk/commentisfree/cifamerica/2009/mar/09/usa-useconomy (visited Apr. 10, 2010).
7. See Robert J. Shiller, "Don't Bet the Farm on the Housing Recovery," New York Times, Apr. 10, 2010, on the Internet at www.nytimes.com/2010/04/11/business/economy/11view.html?emc=eta1 (visited Dec. 1, 2010).
8. For a more thorough discussion of BEA's data on private structures, see Paul R. Lally, "How BEA Accounts for Investment in Private Structures," Survey of Current Business (U.S. Department of Commerce, Bureau of Economic Analysis, February 2009), pp. 9-15, on the Internet at www.bea.gov/scb/pdf/2009/02%20February/0209_briefing_structures.pdf.
9. All dollar figures in this article, unless otherwise noted, are real values in year-2000 dollars. All BEA data in this article are consistent with figures published as of July of 2009 and with EPP's 2008-18 projections presented in this article.
10. See Frank E. Nothaft, "The Contribution of Home Value Appreciation to US Economic Growth," Urban Policy and Research, March 2004, pp. 23-34, on the Internet at www.freddiemac.com/news/pdf/contribution_homevalue.pdf.
11. And Kevin B. Moore and Michael G. Palumbo, The Finances of American Households in the Past Three Recessions: Evidence from the Survey of Consumer Finances (Washington, DC, Federal Reserve Board, Dec. 10, 2009), on the Internet at www.federalreserve.gov/pubs/feds/2010/201006/201006pap.pdf (visited Dec. 1, 2010).
12. Several other price indices are often cited when referencing the housing market, including the Case-Shiller 10 and 20, the Case-Shiller national, and the Federal Housing Finance Agency house price index, but these indexes have historical data going back no further than 1987. Note that, for the years 1987-2009, the Shiller real index is based on the Case-Shiller national index adjusted by the Consumer Price Index measurement of inflation. Earlier years are based on other price measures.
13. For further information on the Shiller real index, see Robert J. Shiller, Irrational Exuberance, second edition (Princeton University Press, 2005).
14. See also http://irrationalexuberance.com/ (visited Mar. 22, 2010).
15. Data on construction put in place and data on permits are not adjusted for changes in prices and are therefore compared with the nominal final-demand data published by BEA
16. BEA implemented a comprehensive revision to its National Income and Product Accounts in July of 2009. The estimates for 2009 are not comparable with earlier annual data as published by EPP because they were based upon BEA data as published before the comprehensive revision.
17. There are many differences between CPS and CES data, only a few of which are mentioned here. For a comparison between the two surveys, see www.bls.gov/bls/empsitquickguide.htm (visited July 19, 2010).
18. That is, EPP assumes that the count of self-employed and unpaid family workers is the equivalent of a jobs count. CPS data are also used by EPP to estimate wage and salary employment in industries for which the CES survey does not provide estimates, including the agricultural and private household industries.
19. The CPS program estimated data for 1983-2002 on the basis of the old Standard Industrial Classification (SIC) codes. Data for 2000-09 are based on the North American Industry Classification System (NAICS). (For 2000-02, data were calculated both within the framework of NAICS and within that of the SIC system.) The 1983-99 data were adjusted to account for the coding change.
20. The industries in table 1 were selected on the basis of those included in Matthew Miller, "A visual essay: post-recessionary employment growth related to the housing market," Monthly Labor Review, October 2006, pp. 23-34.
21. Wood product manufacturing and architectural and structural metals manufacturing did see slight declines in employment over 2001-06. However, these declines were minor in comparison with the loss of jobs in the overall manufacturing sector. Also, both showed much larger declines over 2006-09 than over 2001-06, suggesting that the housing bubble may have held onto jobs that otherwise would have been lost during this period.
22. BEA's benchmark I-O accounts provide the most comprehensive picture available of transactions within the U.S. economy, but are published only once every 5 years. The 2002 benchmark I-O data, released in 2007, were the latest data available for EPP's 2018 projections. On the basis of the 2002 benchmark I-O data, annual data from the National Income and Product Accounts, annual Census data, and data from a host of other sources, EPP estimates a historical time series of I-O data, currently 1993 to 2008.
23. For detailed information regarding the 2002 benchmark I-O accounts, see Ricky L. Stewart, Jessica Brede Stone, and Mary L. Streitwieser, "U.S. Benchmark Input-Output Accounts, 2002," Survey of Current Business (U.S. Department of Commerce, Bureau of Economic Analysis, October 2007), pp. 19-48.
24. For a more complete discussion of the methods used by EPP, see the BLS Handbook of Methods, chapter 13, on the Internet at www.bls.gov/opub/hom/homch13_a.htm (visited Apr. 5, 2010).
25. The employment requirements table is "import adjusted"; that is, it is modified to account only for the sales of domestically produced goods and services to final users because imported goods generally do not generate domestic employment
26. All employees, direct and indirect, earn income that will generally be spent on consumer goods and services, which, in turn, will generate a third type of employment called induced employment (also referred to as "income multiplier effects on employment"). The Bureau of Labor Statistics does not measure induced employment.
27. Estimating total output related to a specific category of final demand requires the assumption that the employment requirements table estimated for the economy as a whole also holds at the more detailed level
28. See Mary L. Streitwieser, "A Primer on BEA's Industry Accounts" (U.S. Department of Commerce, Bureau of Economic Analysis, June 2009), on the Internet at www.bea.gov/scb/pdf/2009/06%20June/0609_indyaccts_primer_a.pdf (visited Dec. 6, 2010).
29. The projections do, however, include in-house projections of the growth of the population, an important contributor to growth within the housing market. For more discussion on how BLS's assumptions affected the 1996 to 2006 projections, see Ian Wyatt, "Evaluating the 1996-2006 employment projections," Monthly Labor Review, October 2010, pp. 33-69.
30. For more information on the 1996-2006 projections, see Thomas Boustead, "The U.S. economy to 2006," Monthly Labor Review, November 1997, pp. 6-22.
31. For more information on the 2002-12 projections, see Betty W. Su, "The U.S. economy to 2012: signs of growth," Monthly Labor Review, February 2004, pp. 23-36.