CARLSBAD, Calif. The recovery of the residential construction sector is creating a housing glut which may not actually support wider economic growth, economist Peter Morici told delegates at the Metals Service Center Institutes Specialty Metals Division Conference March 21.
While the housing sector is recovering in the United States, much of the spending is taking place in the existing home market, which is not the kind we need to regenerate growth, Morici said.
We are also creating a glut of housing for three to four years from now, he added. Were essentially borrowing growth, because were building more houses than we really need. Remember, houses dont go away. Theyre not like cars.
Morici said that U.S. economic growth has been constrained by a trade deficit with China and dependence on foreign oil, both of which he believes could be remedied within years with the right policies.
Oil has a very simple solution: Start drilling, and well get it done, he said. Were going to consume the oil anyway, and it has to be drilled someplace. And where is the environmental impact better managed: here or in Nigeria?
However, Morici predicted that the U.S. economy will likely grow by no more than 3 percent over the next few years.
I dont see the real challenges of manufacturing being addressed in these next four years, he said.