Historians have suggested that during the Great Depression the purchase of durable goods in the economy was delayed due to uncertainty about future unemployment and income. This created a positive feedback loop in the economy as less consumption led to the accumulation of inventory and further layoffs. A similar parallel can be drawn to the current economic state of the United States as more and more recent college graduates entering the workforce (or trying enter) are delaying the durable purchases of houses. The New York Times article (linked below) states that 14.2% of young adults are living with their parents, therefore creating shortage in consumption demand of houses, furniture, repair/maintenance services, internet, utilities and other purchases that are associated with renting an apartment or home ownership. Optimists believe that this “pent up” demand of consumption will be unleashed once job prospects increase and uncertainty decreases, creating a surge in housing demand. It will be interesting to see how long it takes for consumption to rebound.
http://www.nytimes.com/2011/11/17/business/economy/as-graduates-move-back-home-economy-feels-the-pain.html?ref=education
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