From Paul Krugman:
Why we havent had a recession (so far) - Paul Krugman - Op-Ed Columnist - New York Times Blog: Why we haven’t had a recession (so far) The housing bust has lived up fully to my expectations. So far, however, the economy has held up surprisingly well (ask me again in a few months). How come?
It’s the exports, stupid.
I haven’t seen this chart published elsewhere, but it seems to me that it tells the story. The blue line shows residential investment as a share of GDP (left scale). It has plunged impressively. The red line shows exports as a share of GDP (right scale). Thanks to the weak dollar, they’ve risen almost enough to offset the housing plunge.
Meanwhile, consumer spending has held up, and there has been a modest plus from state and local government spending.
No particular policy moral here, just an observation.
I think that there is a policy moral here. Most of the macroeconomic disaster scenarios I have been painting over the past five years had domestic construction spending falling before exports began rising rapidly. We do seem to have dodged that bullet completely.
God does indeed look after fools, children, and the United States of America...