Krugman: Safe as Houses (little of jobs growth due to tax cuts)

[papau]

If job growth under Bush over 5 years, even counting the near 3 million pretend "not on payroll tax" guess, is less than 2 million, then the increased military spending and it's 1.3 million private-sector jobs, plus the increase home building from 4.25 % of G.D.P. to the current 5.98 %, or about $200 billion so as to generate about two million extra jobs, plus Housing wealth increased consumer spending of 3% of the increase - or about $150 billion in spending, and roughly 1.5 million more jobs, are the drivers of job growth - and not the Bush tax cuts $225 billion spike to the spending this year, and the jobs thus created. "Given reasonable estimates of the effect of tax cuts on spending, however, they were probably a smaller force for job creation than the military buildup, and dwarfed by the housing boom."

Safe as Houses

By PAUL KRUGMAN
Published: August 12, 2005

I used to live next door to a Russian émigré. One day he asked me to explain something that puzzled him about his new country. "This place seems very rich," he said, "but I never see anyone making anything. How does the country earn its money?"

The answer, these days, is that we make a living by selling each other houses. Since December 2000 employment in U.S. manufacturing has fallen 17 percent, but membership in the National Association of Realtors has risen 58 percent.

The housing boom has created jobs in two ways. Many jobs have been created, directly and indirectly, by a surge in housing construction. And rising home values have fueled a simultaneous surge in consumer spending.<snip>

In other words, a fuller answer to my former neighbor would be that these days, Americans make a living selling each other houses, paid for with money borrowed from the Chinese. Somehow, that doesn't seem like a sustainable lifestyle.

How solid, then, is America's economic recovery? The British have a phrase that applies: "safe as houses." Our economy is as safe as houses. Unfortunately, given current prices and our dependence on foreign lenders, houses aren't safe at all.

E-mail: [e-mail] http://www.nytimes.com/2005/08/12/opinion/12krugman.html

[sam sarrha]

1. the rich took th tax cuts and created a hellatious Real estate Bubble that

is going to bankrupt the middle/under classes

My wife and i are screwed.. there are3, 4 or 5 houses for sale on every block in this rural area of West TN..

[rfranklin]

2. How's the job market there?

Without jobs, real estate ain't worth much.