How Housing Predicts Unemployment

I noticed a while ago whenst correlating charts on a Saturday night that housing starts and unemployment more or less form a double helix...well, as best a double helix that's ever been formed in economics.


But what I particularly noticed was how housing prices predicated unemployment. Specifically when housing starts tank, unemployment usually peaks 6 months to a year later.

The reason would be that housing starts not only reflect 2-4 months of construction spending whilst the structure is being built, but 2-4 years consumer spending whilst the new owners furnish the building with furniture, drapes and X-Box 360.

There has been the occasional instance where housing starts tanked and unemployment did not increase. But that is the minority of the time.

Fun times ahead.