There are not many pictures that represent a truly positive outlook for the economy, which is to be expected coming out of a major crisis event like we saw in the U.S. and much of the world. However, if we believe that adjustments were necessary to fix what was wrong, then here is a hopeful picture.
The Fed has been wrong about growth lately in their forecasts, and wrong in a very bad way. The Fed forecasts have not yet taken into account fundamental changes in individual behavior. It would not be a surprise that such forecasts were wrong during or in the immediate aftermath of the crisis, but to still be so wrong at this point is worrisome. What is the problem? People are scared.
The following is a graph of housing prices in ND metropolitan areas. I ran it from 2000Q1 to 2013Q2, which was the latest available date. Housing prices in ND have been growing in all three metro areas for some time.
The last several months saw a great deal of public outcry about the housing situation in Grand Forks. This was something of a spaghetti argument: Let’s throw a whole host of issues against the wall and something will stick. Topics included the affordability of housing, the availability of housing, the quality of housing, and so on.
The financial crisis still dominates the mindset of many callers when I go on the radio. It is also interesting teaching a new crop of students this year. Many of them are at that age where they were just starting to pay attention to business, the economy, and public affairs when the crisis hit. That is to say, it is really all they know that is not from a history book. As a result the start of the banking class this year has discussed the crisis quite a bit. One of the discussions we had recently was about banks attempting to cash in on the increased value of homes.