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The Trader's Guide to Key Economic Indicators, 3rd Edition by Richard Yamarone

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CHAPTER 8

New Residential Construction

If you learn one lesson from this book, let it be this: Never underestimate the economic importance of housing. The realization of the American Dream of home ownership is one of the primary drivers of the economy. Housing activity affects the investment (I) component of the aggregate expenditure formula for calculating gross domestic product (GDP) (see Chapter 1): C + I + G + (X − M). The construction of new privately owned residential structures, particularly single-family homes, is very informative about consumer sentiment and the health of the economy. After all, a purchase of this magnitude requires the utmost confidence in one’s personal financial situation, including employment security and earnings ...

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