Housing remains America’s biggest supply chain problem

{"text":[[{"start":null,"text":"

"}],[{"start":12.29,"text":"The US economy has done far better over the past few years than many would have expected, particularly given the multiple headwinds from the pandemic, US-China decoupling, the war in Ukraine and general political chaos in Washington. "}],[{"start":25.52,"text":"The country has enjoyed an almost immaculate economic cooling, along with a still-robust jobs market and good overall gross domestic product growth. "},{"start":33.424,"text":"Particularly when compared with other countries, the US economy looks as good as it could be right now. "},{"start":38.766999999999996,"text":"However, there is one conspicuous fly in the ointment — housing. "}],[{"start":43.67,"text":"You can see it in last week’s consumer price index numbers, which showed inflation to be a bit higher than was forecast. "},{"start":49.974000000000004,"text":"The main culprit, aside from ever-volatile food and oil prices, was housing. "},{"start":54.642,"text":"The shelter index portion of the CPI was up 7.2 per cent over the past year, accounting for more than 70 per cent of the total increase in all items, aside from food and fuel. "}],[{"start":65.64,"text":"The inflation numbers raise the prospect of another Federal Reserve interest rate increase in the future, at a time when Wall Street was betting that hikes were over. "}],[{"start":74.55,"text":"But would that be the best policy solution for the housing problem in the US? "},{"start":78.767,"text":"There’s a strong argument to be made that the answer is no. "},{"start":81.809,"text":"For some time now, the core inflation story in America has been all about housing. "},{"start":86.55199999999999,"text":"Unlike other markets, including the UK, where prices have dropped 13.4 per cent in real terms from their March 2022 peak, the American housing market is not cooling, despite multiple interest rate hikes. "}],[{"start":99.49,"text":"Indeed, you can argue that rate rises have made things worse in housing markets. "},{"start":104.107,"text":"How is this to be explained? "},{"start":105.874,"text":"Start with the fundamental problem, which is too little housing supply rel