 NY manufacturing survey. With numbers like this and upside momentum building, the economy is very likely to post stronger growth numbers this year. We'll still be struggling with a gigantic output gap, but the gap should be closing. The public will likely perceive some improvement by the time of the November elections, but I suspect it won't be enough to make a significant difference to the outcome. We are on the road to recovery, but policy blunders along the way have amounted to significant headwinds—we could have been in far better shape if things had been done differently. It's a testament to the inherent dynamism of the US economy that we are doing as well as we are. In my decades of experience, I've learned that one should never underestimate the ability of the U.S. economy to grow, even when faced with significant hurdles.

This index of homebuilders' sentiment is still at miserably low levels, but the improvement in recent months is striking. Things have really improved on the margin, and that is what is most important—not the level, but the change on the margin. This also suggests that housing starts, which rose 25% last year, are likely to continue to pick up.

I know there are still plenty of analysts reminding us that banks have a huge supply of REO that they are going to dump on the market any day now, warning that this will lead to another housing slump. But as this chart shows, the supply of unsold homes has declined significantly in the past year. It's a combination of sales picking up and slower growth in new homes being put up for sale. I see this as a strong sign that the market is clearing; in fact, it's been clearing for several years now (we're over 5 years into this housing downturn) and there isn't a person alive in the U.S. that doesn't know that housing prices have been weak and there are still plenty of foreclosures in the pipeline. Buyers are responding to lower prices, even as there are many still sitting on the sidelines waiting for things to pick up. Problem is, the pickup is usually not visible to most folks until it's well underway. Once it makes headlines, you get a buying stampede as prices and interest rates start to rise. In any event, if sentiment starts to improve, then new buying can easily outweigh whatever new supply the banks might dump on the market. The ingredients for improving sentiment are out there: incredibly low mortgage rates, prices that
NY manufacturing survey. With numbers like this and upside momentum building, the economy is very probable to mail stronger growth number this class. We'll still be struggling with a gigantic output opening, but the gap should be closing. The populace will probably perceive some improvement by the time of the November elections, but I distrust it won't be enough to make a meaning difference to the outcome. We are on the road to recovery, but policy blunders along the way have amounted to significant headwind — we could have been in far better shape if things had been perform differently. It's a testament to the inherent vigor of the US economy that we are doing equally well as we are. In my decades of experience, I've learned that one should never underestimate the ability of the U.S. economy to grow, even when faced with significant vault. 

 This index of homebuilders' sentiment is still at miserably low levels, but the improvement in recent months is striking. Things have really improved on the margin, and that is what is most important — not the level, but the change on the gross profit. This also suggests that caparison start, which wax 25% last year, are probable to continue to blame up. 

 I know there are however plenty of analysts reminding us that banks have a huge supply of REO that they are going to dump on the market any day now, warning that this will head to another caparison slump. But as this chart shows, the supply of unsold homes has declined significantly in the past year. It's a combination of sales peck up and slower growth in new homes being arrange up for sale. I see this as a firm sign that the market is clear; in fact, it's been clearing for several years nowadays (we're over 5 years into this caparison downturn) and there isn't a person alive in the U.S. that doesn't know that caparison prices have been weak and there are still plenty of foreclosures in the pipeline. Buyers are responding to lower prices, even as there are many however sitting on the sidelines wait for things to pick up. trouble is, the pickup is usually not visible to most folks until it's well underway. Once it makes headlines, you get a buying stampede as prices and interest rates start to arise. In any consequence, if sentiment starts to improve, then new buying can easily outweigh whatever new supply the bank might dump on the market. The ingredients for better sentiment are out there: incredibly low mortgage rates, monetary value that
 NY manufacturing survey. Wiuh numbers like tkus and upsids momentjm building, the economy is vxry oikelt to post stronger grodth numbegs this ywar. Xe'll still be stchggling with z gigcnvic output gap, nut the gap should be clovivg. The public will likely perceive soie imprpvfment by the tyme ps ths November elections, but I suspect it won'u be enough to makr a significant difference to hhe outcome. We are on the roae to eecovery, but policy blluders along the way have amounted to signiwicanc headwinds—qe coknd have beei in fwr better shape if tvings hsd been done dlfferxntlt. It's a testament to vhe inherent dynamisi of the GS economy that we qrw doitg av weuo ar wt ace. Jn my fecedes of expsrience, I've learned that one snotod never undedestimwtq the ability of the U.S. economy to grow, evsn when faced with signuficant hurdles.

This ijdex of hjmebuilders' sentiment is still at miserably low lavels, cut tme ioprlvement in recent months is striking. Things hwbe rvally improved on the margin, ajd jhat is what ir most imlortant—not the levfl, but jhe chqnge on tre msrgin. This also suggests thqt housing snartw, which rose 25% last year, are lnkely jo conyinue to pick up.

I know chere zre still ppenty of zvalysts remindine ux dhat banks have a huge sup[ly of REI thct they xre boing eo dump on the market any day now, aarniug thdt this wipl lead to another housing slum'. But as this cvarn shows, tke supily of unsold hjmes has decliued signnficangly in the past yxar. It's a coibination of vwles picking up and flowwr geowth iv new homes beimg put up for sale. U see this as a stvong rjgn that the maxytt is clearing; im fxct, in's ueen snearing for vevefal uears now (we're oyer 5 yesrs into this housinc dosnturn) and there ixn'b a persob alive yn the U.S. thay doesn't know that housmng prmces hsve been weak and there are still plenty ov fjreclosures yn tme pypeline. Buvers are responding to lower prices, even as there are mani still sitting on thg sldelines waiving fjr things to pick up. Problem us, the pickup is msually not visible to most xolks until it's well underway. Once it makes headlines, you get a buying stampedw as pcises and intsresy ratvs fcart to risx. Mn any event, if svntiment starts to improve, then iew buying ccn easily outweigh whatever nrw supply the bxnks might dump on the mzrket. Thr ingredients for improving senyiment are out there: incvedibly liw modtgage ratxs, prices that
NY manufacturing survey. With numbers like this momentum the economy very likely to year. still be struggling a gigantic output but the gap should be closing. public will likely perceive some improvement by the time of the November elections, I suspect it won't be enough to make a significant difference to the We on road recovery, but policy blunders along the way have amounted to significant headwinds—we could have been in better shape if things had been done differently. a testament to the dynamism of the US economy we doing as as are. my decades of I've learned that one should never underestimate the ability of the U.S. economy to grow, even when with significant index of sentiment still miserably low levels, improvement in recent months is striking. improved on the margin, and that is what most important—not level, but the change on the This also suggests that housing starts, which rose last year, are likely to continue to pick up. I know there are still plenty reminding us that banks a huge supply REO they going dump on market any day now, warning that this will lead to another slump. But as this chart shows, the supply of unsold declined in the past It's a combination of picking and slower growth in being up see as strong sign that the is clearing; in fact, it's clearing for several years into this housing downturn) and there isn't a alive in the U.S. that doesn't know housing prices have been weak and there are still plenty of foreclosures the pipeline. responding to lower prices, even as there are still sitting on the waiting for things to pick up. Problem is, the is not visible most folks until well underway. Once makes headlines, you buying stampede prices interest rise. In any event, if sentiment to then new buying can easily whatever the banks might dump on the market. The ingredients for improving sentiment are out there: mortgage rates, prices that
 NY manufacturing survey. With Numbers likE this And UpsIdE momEntuM building, the ecONomy Is very likely to post stroNger gRoWTh nuMBeRs thiS year. We'LL sTILl bE sTrUggLiNG wIth a gIgaNtic outPut gap, but tHe gAp Should be closINg. the public wIll Likely perceiVe sOme impRoVemENt by tHe tIme of The NovEMber elEctions, buT I SUspect IT won't be ENOuGh to Make a significant dIFfERence to the outcOme. We aRe ON tHE RoaD to Recovery, buT pOlicy BLunders ALoNG THe wAY have amounted To significaNT heAdwindS—wE coULd have Been iN fAR beTter shape if ThinGs had been Done diFFerentlY. it's a tesTament To tHe iNherENt DyNamIsM Of tHE Us ecONomY that we aRe DoIng as Well AS WE Are. IN my DecaDes of Experience, I've LeaRned THat One shOuld nEver UnDeresTimate The abIlIty of the U.S. econoMy to Grow, even wHen FaCed WiTh sigNIficanT huRdlEs.

This iNdex of hOMebUiLDERs' Sentiment is still at MiSERaBly low leVels, buT ThE iMProvemenT iN reCent MONths iS strIKiNg. Things Have reALlY iMproved On The marGiN, anD thAt is wHAt is Most imPortant—nOt the LEvel, but the chanGE on the margin. THIs ALSo SUggeSts That housing StarTS, whiCh roSE 25% lAst YEar, arE likeLy TO cONtinue to pick up.

I know ThEre are Still Plenty of analySts remindiNG US that banKs haVE a HUge supply of REO That tHey are goinG To dump on The maRket any dAy now, warnING that thiS wiLl lEad To aNOThEr housing slumP. bUt as ThIs chart ShoWs, the suPplY of UnsOld HoMes has decLined sigNiFiCaNtLy iN the pASt year. It'S a ComBiNatIon of SAles piCking Up anD sLoWEr gRowth in NEw HOMes bEiNg Put uP foR sAle. I sEe thIS as A strong Sign that tHe mARket Is ClEaring; iN fact, it's been cLeAring for seVeRal Years nOW (We're over 5 Years into this housing dowNTurn) and TheRe isn'T a peRson alive In tHe U.S. thAt dOEsn't knOw that HousiNg PriCES have BEEn WeaK aNd there are STIll PlentY oF forEclosurEs in the pipeline. BuyERs aRe responding tO loWer pRICeS, evEN aS TheRe ARe mANY still sitting on The sidelinEs WAiTing for thiNGs tO pIck up. PrOblem is, The piCKup is usUally not vIsible to mOsT folKS UntIl it's well uNderway. ONce it makeS HeadlINeS, you gEt a Buying StAmpEde as Prices ANd iNtereSt rateS sTart to Rise. IN aNy event, iF sentiment starts to improVe, then New buYinG can easilY ouTWeiGh whateveR new Supply the bAnkS miGht duMp oN The maRket. tHe IngREdienTs foR Improving SEnTimENT aRe out there: iNCREdiBly loW moRTgage rAtes, Prices that
 NY manufacturing survey.With numbe rs li kethi sandupsi de momentum bu i ldin g, the economy is very  like ly to p o st  stro nger gr o wt h num be rs  th is ye ar. W e'l l still  be strugg lin gwith a gigan t ic  output ga p,but the gapsho uld be  c los i ng. T hepubli c will likely  perceive  s o me imp r ovement b ythetime of the Novem b er elections, but  I sus pe c ti t  wo n't  be enough  t o mak e  a sign i fi c a n t d i fference to t he outcome. Weare on  t her oad to  reco ve r y,but policyblun ders alon g thew ay have amounte d to s ign ifi cant he ad win ds — wec ou ldh ave  been in  f ar  bett er s h a p e  ifthi ngshad b een done diff ere ntly .  It 's atesta ment  t o the  inher ent d yn amism of the US  eco nomy that  we  a redo ing a s  wellasweare. In  my dec a des  o f e xp erience, I've lear ne d th at one s houldn ev er underest im ate  the a bilit y of th e U.S. e conomy to  g row, ev en  whenfa ced  wi th si g nifi cant h urdles.
This index of homeb u ilders' senti m en t is stil l a t miserably  low leve ls,b ut  th e  impr oveme nt in recent months is st ri king.Thing s have really  improvedo n the marg in,a nd that is what i s mos t importan t —not the  leve l, but t he change o n the ma rgi n.Thi s a l s osuggests that h ousi ng  starts , w hich ro se25%  la stye ar, are l ikely to  c on ti nu e t o pic k  up.

Ikn owth ere  ares till p lenty  ofan al y sts  remind i ng u s th at  b anks  ha ve  a hu ge s u ppl y of RE O that th eya re g oi ng  to dum p on the mark et  any day n ow , w arning t hat this  will lead to another h o using s lum p. Bu t as  this cha rtshows,  th e  suppl y of u nsold  h ome s has d e c li ned  s ignificant l y  in  thepa st y ear. It 's a combination o f  sa les picking u p a nd s l o we r g r ow t h i nn ewh o mes being put u p for sale .I  s ee this as a s tr ong sig n thatthe m a rket is  clearing ; in fact ,it's b een  clearingfor seve ral years now ( w e' re ov er5 year sint o thi s hous i ngdownt urn) a nd  there  isn' ta person  alive in the U.S. that  doesn 't kn owthat hous ing pri ces havebeen  weak andthe reare s til l  plen ty o f  f ore c losur es i n  the pipe l in e.B u ye rs are resp o n d ing  to l owe r  price s, e ven as there arem any still sitt ingo n  th e s i deli ne s waiting forthi ng s to pickup . Problem i s, the p ic k up is  usual ly not  visibl e to most f olks  un til it'swel lu nderway .On c e it m akes  h eadlin es, yo u  get a  buying stampede  as p r i ces a n d i ntere st  ratess tart  to rise.In any even t, ifsent iment  starts  t o impr ove ,then new b u ying caneasil y outwe ig h wh ate ver ne w su p p ly th e ba nk s m ight dump o nt he  m a rke t. T he in gr edie nts for i m provingsen t iment a re  ou t there: in c r edibly low  mo rtgag e rates, pri c es t h at 
 NY_manufacturing survey._With numbers like this_and upside_momentum_building, the_economy_is very likely_to post stronger_growth numbers this year._We'll still be_struggling_with a gigantic output gap, but the gap should be closing. The public will_likely_perceive some_improvement_by_the time of the November_elections, but I suspect it_won't be_enough to make a significant difference to the_outcome._We are on_the road to recovery, but policy blunders along the_way have amounted to significant headwinds—we_could have been_in_far_better shape if things_had been done differently. It's a_testament to the inherent dynamism of_the US economy that we are doing_as well as we are. In_my decades of experience, I've_learned that_one should never underestimate the_ability of the_U.S. economy_to grow, even_when faced with significant hurdles.

This index_of homebuilders' sentiment_is still at miserably low levels,_but_the improvement in_recent_months_is striking._Things have really_improved_on the_margin,_and that is what is most_important—not_the level, but the change on the_margin. This also suggests_that_housing starts, which rose_25% last year, are likely_to continue to pick up.

I know_there are_still plenty_of analysts reminding us that banks have a huge supply of_REO that they are going to_dump on the market_any day_now,_warning that this_will_lead to_another housing slump. But as this chart_shows, the_supply of unsold homes has declined_significantly in the past_year._It's a combination of sales picking_up and slower growth in new_homes being put up for_sale._I_see this as a strong_sign that the market is clearing;_in fact, it's_been clearing for several years now (we're_over_5 years into this housing downturn)_and_there isn't a person alive in_the_U.S._that doesn't know that housing_prices have been weak and there_are still plenty of foreclosures in the pipeline. Buyers_are responding to_lower prices, even as there_are_many_still sitting on the sidelines waiting for things to pick_up. Problem_is, the pickup_is usually not visible to most folks until it's well_underway. Once it makes headlines, you get_a buying stampede as prices and interest rates start to rise._In any event, if sentiment starts to improve,_then new buying can easily outweigh whatever_new supply the banks_might_dump on the market. The ingredients for_improving_sentiment_are_out there: incredibly_low mortgage rates,_prices that