This isn’t something I normally worry about since I am not an economist (thank goodness). However, I was struck by this Washington Post article that pointed out how drastically the recovery has been impacted by the lack of household formation.
The recession reduced the rate at which Americans set up new homes or apartments by at least half. Although the number of new households has begun to recover over the past year, its growth rate continues to lag behind its historic pace, according to Census Bureau statistics.
More than one in five adults between ages 25 and 34 live with their parents or in other “multi-generational” living arrangements, the highest level since the 1950s, according to the Pew Research Center.
Analysts estimate that there are more than 2 million fewer occupied homes than there would have been had Americans continued moving into new homes and apartments at the rate they did before the recession.
Household formation is important because it is usually a period of much higher than normal consumer spending. Once you move out, you end up acquiring some of your own furniture, dishes, and so on. If the recovery ever gets going, there will probably be extraordinary demand for housing—not just the regular demand, but also all of the pent-up demand from adults now living with their parents—and a really big burst of consumer spending.
Source: goodenoughmother.com (click on image to enlarge)
