STRONG GROWTH IN NEW HOUSEHOLD FORMATION: IS THIS A GOOD INDICATOR FOR THE NEXT 4 YEARS?

Posted by Leonard Steinberg on November 7th, 2012

New American households are being set up at the fastest rate in more than six years: is this an indication that recession anxiety, which prompted adult children to move in with their parents and single people to postpone marriage, is starting to ease? Is this an indicator that we are entering the beginnings of the real economic recovery?

1.15 million households were added in the US in the 12 months that ended in September, according to a recent Census Bureau data. That is a significant rise from the past four years when an average of 650,000 households were formed annually. ¬†Household formation is still running lower than the average 1.25 million added annually during the boom years, yet this is an important shift.¬†Rising household formation is tied to employment growth and means more students are finding jobs when they leave college, more adult children are leaving their parents’ homes and more couples feel confident enough about the future to tie the knot. It could also mean that immigration is picking up.

With four more years of Obama, we hope this is the beginning of a stronger economic growth surge, to counter the tepid recovery that plagued our economy for the past 4 years. Now comes the essential ‘getting down to business’ moment of the election……the moment when hard, critical decisions have to be made and policy has to be agreed on to get the economy growing at a faster stronger rate. Regardless of whether you are Democrat or Republican, strong growth is the key to higher revenues and lower spending. The minute housing is healthy again, we will know the economy is back…..and all indicators are that we are heading there.