Autos and housing

Now that the Pollyanna's have had close to a year to tell you how disastrous the housing meltdown is and how horrible are the economic consequences of the slow down in auto sales, it is my turn to remind you that the American economy is so huge, dynamic and extensive that neither of these issues constitute a serious problem.

Here are the numbers.  Our Gross Domestic Product is $14.3 trillion.  We have grown $.2 trillion so far this year. The entire residential new housing market is roughly the size of our GDP growth so far this year and the same is true of the entire domestic auto industry.

Even in employment the same numbers hold true.  We have over 100 million people in the labor force and only .5 million are in residential housing or auto manufacturing.

The reality is that the multiplier effects of housing market and auto market reductions are larger than the actual declines in employment and GDP data, but similarly, many of the residential housing workers went into the commercial building fields and many auto workers shifted to foreign auto companies operating in the U.S.

Now, I hope you can see why I say we are no longer susceptible to business cycles.   We grew because we are still incredibly productive and because the low dollar generated export business.