US Macro: Building Permits February 2017
Building Permits are very important for the US economy. Retrieving information about the real estate sector is fundamental for two reasons. The most obvious (and what most of the people see) is that construction represents around 4% of the GDP. So it’s quite a big sector that we might want to keep an eye on.
However, there’ss a much more important reason. The health of real estate sector also gives us information about the liquidity in an economy. It gives us information about the ability of the financial sector to, well, finance. So basically good news from the construction sectors means good news for all the economy. This is why I think it’s fundamental to check this to get a view of the US economy.
The indicator that we are going to check, with the intention to be as forward-looking as possible, is Building Permits Authorised. If lots of houses are been authorized, then will be started, completed and sold. This means the GDP is yet to come. That’s why I picked this graphs for this analysis.
What we can see is actually very good. The second half of 2016 has been very positive for this indicator, especially “post-Trump” election. Not only are permits growing but the rate at which they are growing seems to be accelerating. Both these things together are very important and should make us lean towards “bullish”. Of course, there are many other things that we should take into account. But at least according to Building Permits, we should be positive for now.
Nuño Pérez del Barrio