GDP -- A Look At PCEs

Personal consumption expenditures -- PCEs -- account for about 70% of GDP growth. In addition, PCEs have three sub-parts -- service expenditures (about 66% of PCEs), non-durables (about 22% of PCEs) and durable expenditures (about 12% of expenditures). Here are the charts that show the percentage increase from the preceding quarter in real PCEs and its components from the largest to the smallest. Click on all images for a larger image


The percentage change from the preceding quarter in overall PCE growth is now larger than the three quarters that preceded the recession.


The pace of increase in service expenditures is increasing, as is



The pace of increase in non-durable PCEs.



Durable goods purchases are languishing still. But, remember that these only account for 12% of overall PCEs.

GDP and Jobs 2

Yesterday I wrote about the extremely close fit between % changes in GDP and % changes in jobs on a year-over-year basis. Generally speaking, take the YoY %age change in GDP, subtract 2, and you are probably within a percent or two of the YoY % change in jobs, with a lag of a few months.

But the YoY change doesn't tell us about when we begin to add jobs coming out of a recession. For that we need to compare changes in GDP with monthly gains or losses in payrolls, which is what I've done below.

First, let's look at a graph of the 1992 "jobless recovery." YoY GDP is in blue (right scale, note I am not subtracting 2 in this graph), monthly gains/losses to payrolls is in red (scale to the left, in 1,000s):

Once YoY GDP turned positive in 4Q 1991, there was only one more month in 1991 and one in 1992 where jobs weren't added to the economy.

Next is the very lackluster "jobless recovery" of 2002-03:

The offshoring of manufacturing was in full swing by this time, and only 3 months of 2002 showed job gains (June, October and November) while GDP was positive over 1% throughout, reaching a YoY gain of just under 2.3% in 2Q 2002. Once YoY GDP hit 2% consistently beginning in 2Q 2003, jobs finally were added to the economy on a consistent basis.

Finally, here is the "Great Recession":

We learned this morning that 4Q 2009 GDP was 5.7%, giving us a YoY GDP of 0.8%. The Leading Economic Indicators virtually guarantee another good GDP number for Q1 2010, making it very likely that we will have YoY GDP in excess of 2% this quarter.

Strictly going by the GDP, if the economic expansion is more like 1992, we are going to start adding jobs consistently now. (Based on increases in industrial production, retail sales, and declining layoffs, I think this is more likely). If the expansion is more like 2002, we are going to add jobs sporadically in some months and not in others. What everyone is watching is sustainability. If gas prices go up too much, or as the effect of last year's stimulus plan begins to wane, can gains be sustained? And noboby is talking about declining unemployment yet. On that, the jury is very much out.

GDP +5.7

From the BEA:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 5.7 percent in the fourth quarter of 2009, (that is, from the third quarter to the fourth quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.2 percent.

Let's break the data down into small parts.

Real personal consumption expenditures increased 2.0 percent in the fourth quarter, compared with an increase of 2.8 percent in the third. Durable goods decreased 0.9 percent, in contrast to an increase of 20.4 percent. Nondurable goods increased 4.3 percent, compared with an increase of 1.5 percent. Services increased 1.7 percent, compared with an increase of 0.8 percent.

The decrease in durable goods makes sense considering the increase caused by the cash for clunkers program in the third quarter. Also remember that durable goods is the smallest component of PCEs, totaling just 12% of total expenditures. The increase in non-durables is a pleasant surprise while the increase in services (the largest component of PCEs at 65.77%) is welcome as well.

Real nonresidential fixed investment increased 2.9 percent in the fourth quarter, in contrast to a decrease of 5.9 percent in the third. Nonresidential structures decreased 15.4 percent, compared with a decrease of 18.4 percent. Equipment and software increased 13.3 percent, compared with an increase of 1.5 percent. Real residential fixed investment increased 5.7 percent, compared with an increase of 18.9 percent.

The increase in equipment and software is very welcome, as it indicates the business is starting to restock it's physical infrastructure. And in increase in residential investment is also a positive development.

Real exports of goods and services increased 18.1 percent in the fourth quarter, compared with an increase of 17.8 percent in the third. Real imports of goods and services increased 10.5 percent, compared with an increase of 21.3 percent.

The increase in exports plays into the Asian economies leading the world out of the recession theme (which is already happening). The decrease in imports indicates the US demand is also increasing.

I expect a fair amount to be made about the effect of inventory building in the report. These account for almost 60% of the 5.7% growth rate. What you're seeing here is a ridicules attempt at saying "some growth is bad and some growth is good." The bottom line is inventory restocking is a legitimate economic activity that leads to growth. The argue otherwise is to let your prejudices color your analysis.

Overall, this is a good report. While I don't expect the pact to continue, I do expect a continued increase in GDP.

I'll be breaking the numbers down on a section by section basis for the rest of the day, so stay tuned.

Forex Fridays

Overall, the dollar is in the middle of a rally that so far has three legs - up (A), sell-off/correction (B) and a resuming of the trend (C). Let's break this down.



In the first leg up, we had some major gaps higher (1) indicating there was a fundamental shifting in supply and demand.



Prices rallied to previous highs before forming a pennant pattern (B). Prices sold-off to the 50% Fibonacci retracement level.


Prices resumed their rally (C). Along the way they have gapped higher several times (1) and broken through previous levels (2).

Today's Market

A.) Prices have moved through key technical support levels on high volume. Also note that volume has been higher on all tghe sell-off days.


A.) Prices have moved through key technical levels on high volume.


A.) Prices are right at key technical levels.

So far, the SPYs have dropped about 5.6%, the QQQQs have dropped about 6.1% and the IWMs have dropped about 5.2%. In other words, we're hardly in scary territory from a total loss perspective. However, this is all before tomorrow's GDP report (which I'll be covering in-depth when it comes out.)

What Barry Said

From the Big Picture:

The question usually comes up in response to something I wrote. I’ve been contacted by Republicans, who want me to join or advise their committees. I usually tell them that I find much of their ideology intellectually indefensible, and their marriage to the religious right offensive.

When I get the same question from Democrats, my response is they seem to not understand how the economy works, are too spineless to get anything done, and are way too politically correct for my tastes.

I agree. Completely.

New Home Sales Drop

From the WSJ:

Demand for new homes in December fell, as cold weather and continuing joblessness put a chill on hopes for a housing-market recovery.

Single-family home sales fell 7.6% from November to a seasonally adjusted annual rate of 342,000, the Commerce Department said Wednesday, though it noted the drop was within the margin of error. December's reported drop followed a 9.3% plunge in November. Meanwhile, on a positive note, home inventories fell last year, compared with 2008, but prices fell, too.

"The new-home market continued to wilt late in 2009," Mike Larson, an analyst at Weiss Research Inc., wrote clients. "The buyers who are willing and able to buy are flocking to cheaper, distressed, 'used' homes."

Home sales for all of 2009 dropped sharply, by 22.9% to an unadjusted 374,000, from 2008's 485,000, as the industry struggled after collapsing from its multiyear boom.

New-home sales suffered because of strong demand for used homes and the looming expiration of a big tax credit. Fears that the $8,000 government incentive for first-time buyers would run out Nov. 30 pushed purchases into earlier months. Congress in early November extended the relief through April.

Let's go to the data:


While the pace of new home sales has dropped the last few months, a longer term look at the data indicates the pace of new home sales is bottoming and has been for most of 2009. However we have not seen a meaningful increase from these historically low levels.



Thanks to Calculated Risk for the graph.

New home inventory is very low by historical norms. That means excess inventory of new homes has been cleared out -- an economically healthy development.

GDP and Jobs

- by New Deal democrat

Tomorrow the advanced estimate of 4th Quarter 2009 GDP will be released, and the likelihood is that all of the popular blogs will be trumpeting that the number is but a "blip," taking their cue from Professor Krugman.

It is well to remember that, regardless of the source of GDP growth, whenever that growth has been in excess of 2.3% a year, it has always led to job growth. Below is the evidence in graphic form. Per prior discussions of "Okun's Law," the blue line represents YoY GDP growth, minus 2% (e.g., 2% YoY GDP growth - 2% = 0% on the graph). The red line is YoY nonfarm payrolls, on the same scale. Here is the immediate post-WW2 period:

Here are the 1970s and early 1980s recessions:

Here is the era of "jobless recoveries" up until the present:

Notice how well the red line tracks the blue line, and how peaks and troughs are typically ~2% or less apart.

To refresh your memory, here is GDP for the first 3 quarters of 2009:
-6.4% (Q1 2009)
-0.7% (Q2 2009)
+2.2% (Q3 2009)

Even if there is a blowout good number tomorrow (that stands up to subsequent revisions), we're not going to hit +2% YoY GDP growth as of the end of 2009. But beginning this quarter, the goal is much more doable, as 2 quarters of +3.3% growth will be sufficient.

Also, keep in mind that the above graph is for YoY payrolls. A trough is made somewhere in the middle of the year where YoY growth = 0%. Beginning with the 1948 recession, here is the lead time between troughs in jobs and YoY GDP growth in excess of 2%(in descending order, in months):

-9 -8 -6 -5 -4 -4 -3 -2 -2 +7

In case you weren't sure, the +7 outlier is the extremely weak "jobless recovery" of 2002-2003. Even the 1992 "jobless recovery" fit the above pattern.

Notice also that the 1980 "blip" used by Prof. Krugman and others as their exemplar nevertheless generated several quarters of actual job growth.

Assuming the worst case scenario (of 2002-03), if 1Q 2010 is 2.3% or more higher than 1Q 2009 GDP, YoY payrolls will show no losses by August 2010, suggesting a trough in February or March. Under any other scenario, jobs are at their trough now (or revisions will show that we are already past it). Blip or no Blip.

Initial Jobless Claims Drop

From the Department of Labor:

In the week ending Jan. 23, the advance figure for seasonally adjusted initial claims was 470,000, a decrease of 8,000 from the previous week's revised figure of 478,000. The 4-week moving average was 456,250, an increase of 9,500 from the previous week's revised average of 446,750.

Here is the data:



Remember last week we had a big spike of 36,000 that was caused by "administrative" issues -- claims were filed but not processed in the preceding weeks. Therefore, a large backlog was processed in a short period of time. This week we saw a decrease in the one week numbers but an increase in the 4-week moving average. I would expect the 4-week moving average to increase for the next few weeks, largely as the result of the jump of 36,000 last week. However, so long as we continue to see the decrease continue, the jump will amount to a statistical blip.

Thursday Oil Market Round-Up

A.) Oil prices are consolidating in a triangle formation.



A.) Momentum is decreasing and

B.) People are leaving the security.

However, when prices are consolidating, it's important to look at oscillators. To that end


Both the fast stochastic (A) and slow stochastic (B) are showing an oversold condition in the market.

Today's Market

There are two important questions with the SPYs right now.

1.) Are they forming a bottom?

2.) Is the bottom strong enough to launch a rally?

Right now the evidence is the SPYs are stabilizing. However, notice that so far the 110.00 - 110.50 area has proved to be difficult to more through.

A Closer Look At Copper

Copper is a key component in many products. Therefore, it is considered to be a leading indicator. Because the markets are currently experiencing some turmoil, now is a good time to look at the chart to see what it says about possible future market direction.


Prices have dropped through several key resistance areas. However, the markets are still open so this could reverse.


A.) The 10 and 20 day EMAs are moving lower and prices are below these EMAs. This is bearish.

B.) Prices are above the 50 day EMA.


A.) The A/D line indicates money is still moving into the market.

Case Shiller Index Mixed

From the WSJ:

The indexes showed prices in 10 major metropolitan areas fell 4.5% in November from a year earlier, while the index for 20 major metropolitan areas dropped 5.3% on the year.

Both indexes declined 0.2% compared with October. Adjusted for season factors, the 10-city index was flat on the month, while the 20-city composite fell 0.1%.

Let's look at the data:

On a year over year basis, the price picture continues to improve -- the rate of decline continues to lessen.

However -- this is where the concern sets in. Notice the 13 cities saw a drop in prices. That is not a good development. While the drop of .2% isn't concerning because of its size, downward movement is not welcome.

Wednesday Commodities Round-Up

A.) Prices have broken two key trend lines, indicating a change in trend is occurring.



A.) The 10 and 20 day EMA are moving lower and the 10 day EMA has crossed below the 20 day EMA. Finally, prices are below all the EMAs.


A.) Momentum has clearly dropped bu

B.) We're not seeing a huge exodus from the shares.

Today's Market

Click on all images for a larger image



Prices are just below important technical levels.



Prices are below the EMAs and the shorter EMAs are moving lower. Additionally, the 10 day EMA has moved below the 20 day EMA.



Prices are at technical support. Additionally, the 10, 20 and 50 day EMAs are moving lower and the 10 day EMA has crossed below the 20 day EMA.



The QQQQs are at important technical levels. In addition, the 10 and 20 day EMAs are moving lower and the 10 day EMA has moved through the 20 day EMA.

The point of all these graphs is clear: the markets are hanging in the balance right now.

Tranports Are At Important Support Levels

The transports have moved through several key areas of support and are at important technical levels.

Obama Proposes Spending Freeze

From the NY Times:

President Obama will call for a three-year freeze in spending on many domestic programs, and for increases no greater than inflation after that, an initiative intended to signal his seriousness about cutting the budget deficit, administration officials said Monday.

.....

The freeze would cover the agencies and programs for which Congress allocates specific budgets each year, including air traffic control, farm subsidies, education, nutrition and national parks.

But it would exempt security-related budgets for the Pentagon, foreign aid, the Veterans Administration and homeland security, as well as the entitlement programs that make up the biggest and fastest-growing part of the federal budget: Medicare, Medicaid and Social Security.

The payoff in budget savings would be small relative to the deficit: The estimated $250 billion in savings over 10 years would be less than 3 percent of the roughly $9 trillion in additional deficits the government is expected to accumulate over that time.

Why are they doing this?

“A lot of our caucus won’t like it but I don’t think we have any choice,” said an adviser to Congressional Democratic leaders, who would only speak on condition of anonymity about internal party deliberations. “After Massachusetts and all the polls about independents’ abandoning us for being fiscally irresponsible, we can’t afford to be spending more than Obama.”

Here are a few points, in no particular order of important.

1.) We're in the middle of a recession -- the worst recession of the last 60 years. We have to spend money now to alleviate the effects of the recession and get us out of the recession. That's standard Keynsean economics 101. And so far it's worked -- the economy grew 2.2% in the third quarter, largely thanks to government spending.

2.) The cuts are in fact pretty small and therefore mostly symbolic.

3.) Notice there is no talk about getting out of Afghanistan. While I am loathe to inject my political thoughts into this process, suffice it to say I believe trying to win a war in a country that has been at war for a very long time is a pointless task. I view this effort in similar terms -- no win.

4.) There is the possibility that he is playing to the bond market in an attempt to keep interest rates lower.

5.) A lot of the problems I have with this is a matter of timing. Is this he right time to be talking about deficit reduction? I don't think so. Given the US has a 10% unemployment rate this is really the time to spend to get people employed. To that end, I would propose a public works project that employs all the unemployed construction workers we currently have. That would be a really good idea.

Existing Home Sales Tank

From Bloomberg:

Existing home sales in plunged a little deeper than expected in December though prices surprisingly firmed in the month. Sales fell 16.7 percent for the largest monthly decline in data going back to 1968. The annual rate of 5.45 million units compares with expectations for 5.90 million and against the 2009 total of 5.16 million. Declines swept all regions especially the Midwest and were split evenly between single-family homes, down 16.8 percent to a 4.79 million rate, and condos, down 15.4 percent to 0.66 million.

Now the goods news. Prices firmed, up a sizable 4.9 percent on the median to $178,300 and up 6.4 percent on the average to $225,400. The National Association of Realtors, which compiles the report, attributed the gain to a higher proportion of repeat buyers during the month. First-time buyers, enticed by special credits, were a key force behind the housing sector's pop higher in the second half of last year. The first round of housing credits expired in November before being extended and expanded into the spring, a factor that is likely to lead to acceleration in home buying in the coming months.

But right now the housing sector is once again very soft. A special negative in today's report is a rise in supply, to 7.2 months at the current sales rate vs. 6.5 months in November. Reaction to today's report was muted with stocks and the dollar slipping very slightly. New home sales will be posted on Wednesday and are expected to firm following an 11 percent tumble in November.

Here is the chart:



While I am pleased with the price picture, the rest of the report was terrible, plain and simple. The only consolation is it is one month of data. That's about it.

Treasury Tuesdays

A.) Prices broke the downward sloping trend line and

B.) Moved higher, with several upward gaps along the way.

This is a good example of why it's important to always know where support, resistance and trend lines are. Breaking a trendline is an important technical development that must be heeded.


A.) The 10 and the 20 day EMAs are moving higher and the 10 day EWA has crossed over the 20 day SMA. Prices are above all the EMAs.



A.) The MACD is moving higher, indicating momentum is on out side, but

B.) The A/D line has not increased, indicating we're not seeing an accumulation of shares. That means this might be a counter-trend rally.

Today's Market

Prices consolidated today in a small range. This is good news as it slowed the freefall from last week. However, we're not out of the technical woods yet. Last week's price action really did some damage to the markets as a whole.

BRIC Consumers to the Rescue?

From Bloomberg:

Developing countries led by China and India will supplant the American consumer as the source of “natural growth” for the global economy, according to Paul Sheard of Nomura Securities International Inc.

There will be “less exuberant and robust consumption than we had in the past few years” in the U.S. because the American household will continue to “tighten its belt,” New-York based Sheard, global chief economist at Nomura, said in a Bloomberg Television interview in Hong Kong today. “There are other parts of the world, though, that can take up some of that slack,” such as China and India, he said.

This is a big change, but one that was bound to come. As other parts of the world experience economic growth, they increase their spending/purchasing power. As that happens, their overall demand for "things" increases. Overall, it's a healthy trend as the world grows less reliant on the US consumer.

Market Mondays, Continued

Let's continue with a look at the QQQQs

A.) Prices found resistance in the 46.50 area. They found support in the 45.50/45.60 area. They advanced to the 46.50 level three times only to fall back (C).

D.) Prices could not make it to the 45.50 area on their fourth try, and began a series of lower highs and lower lows for the remainder of the week. Note the higher volume on the sell-offs.



Note that prices have moved through three areas of technical support over the last three days.



A.) Prices moved through the 10, 20 and 50 day EMA as well.




A.) The MACD sent a sell signal before the sell-off and

B.) We saw outflows from the market as well.

Pent-up Housing Demand?!?!

- by New Deal democrat

For information geeks like me, the St Louis Fred has premiered a brand new toy, namely, the ability to perform mathematical functions on one or more data series and generate a graph of the result. Taking it for a test spin, I decided to find out how big the housing bubble really was on a population weighted basis. I divided housing permits by population, and this is the surprising result I got:


On a per capita basis, the housing boom of a few years ago doesn't look that outlandish at all! In fact, at least 3 prior booms in the last 40 years were bigger. On the negative side, the current housing bust is even more clearly the worst in the post WW2 era.

Since I had previously done the calculations, I was able to take the comparison further back in time. Last July, I posted about Housing during the Roaring Twenties and Great Depression. Here's the graph from a 1954 text that I started with:



I found the Department of Labor source data or "non farm housing starts," and generated the following chart, which also in the last column converted the housing starts by multiplying the data proportionate to the population for each year compared with our modern population of 300 million. All data is in 1000's:

Year	Nonfarm housing starts	2009 equivalent
1920	247	699
1921	449	1236
1922	716	1953
1923	371	994
1924	893	2350
1925	937	2423
1926	849	2177
1927	810	2042
1928	753	1867
1929	509	1252
1930	330	805
1931	254	615
1932	134	322
1933	93	221
1934	126	300
1935	221	522
1936	319	748
1937	336	781
1938	406	937
1939	515	1179
1940	602	1368

Note that this chart is for nonfarm housing starts only. In 1930, 25% of the US population lived on farms, compared with only 2% today. So if anything, the 1920s boom was much more of a bubble than the recent one. Similarly, the population adjusted 221,000 housing starts from 1933 is considerably worse than the April 2009 bottom of 498,000.

So, contrary to most prevailing opinion, is the housing bust creating pent-up demand? Certainly there is an oversupply of houses - at current asking prices - on the market now. Nevertheless, in a long term secular sense, I believe the answer is "Yes."

While the US population is growing by about 1% a year, new home buyers are what drives that market, and that is very age sensitive. First time home buyers are generally younger persons who have formed a new household and are ready to move from an apartment or their parent's home to their own. In other words, the number of first time homebuyers over time ought to be proportionate to the number of persons who are entering the stage of their lives where they are ready to form their own household and buy their first home. That number isn't static or growing smoothly, as this graph of immigration adjusted births by year by the Harry S. Dent Foundation (whose investment advice based on it may not have been so hot) shows:


The Baby Boom peaked at 5 million births a year in the late 1950s, and the Gen X baby bust reached a nadir of less than 4 million in the early 1970s. The echo boom of Gen Y/Millenials peaked at about 5 million again in 1990. The data used in this graph is corroborated by the demographics information supplied in the 2000 Census.

In other words, the number of people at the right age to buy their first house would have contracted by 1 million a year as the Boomers gave way to Gen X, and then rise again by up to 1 million as the Millenials enter house buying ages. What we need to know is, at what age range do people typically form a new household, and at what age range do they typically buy their first house?

Although the data isn't available for use at the St. Louis Fred site, the Census Bureau does break down population by quintile, and from this we can obtain information about the average age that new households are formed, and here it is:



Not surprisingly, young people begin to move out of their parents' homes at about age 20. Those who married very young form their own household, while young singles live with roommates. By age 25, new household formation rapidly accelerates, and continues through age 35, by which time close to the maximum percentage of people are living in their own or spouse's household.

Of course, while some people may move directly from their parents' home to a house of their own, many if not most will go through a period of living in an apartment. The median age of first time homebuyers is therefore a little older than the median age of forming a new household. This information is very difficult to obtain, but a survey conducted in 2006 found that the average age of first time homebuyers in the Gen X and Boomer eras was 29 years old. (The survey found that Millenials were buying at age 26 on average, but since they include persons born as late as 1994 in that group, I think we can safely ignore that anomaly.) For our purposes, we can round to age 30 as the average age of first time homebuyers, which is also the median age of 2009 first time home buyers as found in a survey by the NAR.

Interestingly, the National Association of Home Builders reported that at the peak of the housing bubble in 2005, the Census Bureau found that the median age of home buyers was up to 33 years old, perhaps reflecting the unaffordability of housing at the market's peak.

Applying this information to housing, we would expect the Boomer generation's impact on first time home buying to begin shortly before 1976 and to have reached its peak first home buying years around the late 1980s. After that, the pool of young first time homebuyers would gradually shrink until about 2005, and then begin to rise again. Obviously I'm not suggesting a perfect fit to the data that begins this post. Mortgage interest rates obviously play are role, as do home buyers expectations about whether prices for houses will be stable, go down, or rise during the period of their ownership. For example, as the first Boomers entered the housing market, prices began to rise with demand (and 1970s inflation and interest rates), making housing much more expensive for later Boomers. Similarly, in essense the housing bubble of 2004-6 borrowed future demand for housing. The nadir we should have had then, we are having now.

So, what is the condition of the Millenial generation? According to the Bureau of Labor Statistics, job losses during the Great Recession have been particularly concentrated among the youngest cohort of the workforce. A smaller share of 16- to 24-year-olds are currently employed--46.1%--than at any time since the government began collecting such data in 1948. Thus, at the moment, the "echo boomers" may be the "Boomerang" generation, moving back in with their parents to save money in a dismal job climate:

According to a recent Pew Research Center study [conducted in October 2009], one in 10 adults between the ages of 18 and 34 said the poor economy has forced them to move back in with mom and dad.... In addition to those who have moved home, another 12 percent scurried to find a roommate to scale down living expenses.

Young adults are altering their behavior in other ways too. About 15 percent of adults younger than 35 say they have postponed getting married because of the recession, according to Pew.

Not only can they not afford a big wedding, but they don't have the money to buy a house or take care of a child, the study said. Fourteen percent of young adults say they have put off having a baby.

"They are delaying important decisions, perhaps indefinitely. We hope it's temporarily, but that's contingent upon the economy improving," said Richard Morin, a senior editor at Pew and the study's author. "These aren't slackers. These are people who are in transition, and their lives are on hold."

As this graph of the most recent Case Schiller house price index by Calculated Risk shows, housing prices still have a way to go to fall to their longer term mean:

so the Boomerang generation is going to have a difficult time buying their first home for a few years to come.

I'm not saying that housing is set to take off this month or this year. Nevertheless, in a secular sense, a long term bottom in the housing market is taking place now. Thirty years ago it was 1980, and the Baby bust of Gen X was giving way to the echo boom of Gen Y/ Millenials. This means that every single day, there is more and more demographic pressure building up on the demand side of the housing market, and that pressure is going to continue to increase for the next 10+ years.