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Fundamental Marker of U.S. Economy Falling Through Zero Growth

Aug. 27, 2017 (EIRNS)—The rate of household formation in the United States has fallen dramatically, and has dropped to zero growth or below, three times since the 2008 crash, including in 2016-17—it is now again at zero growth. This is reported and graphed, using U.S. Census data, by Deutsche Bank Economics. This may be attributed, above all, to unemployment or misemployment and the unaffordability of housing—with rents rising 5-7% a year for a decade, and new home prices extraordinarily high (the national average has reached $360,000 for new homes, 75% higher than in 2007).

The rate at which residents of a nation between the ages of 18 and 34 form new households—not in their parents’ or grandparents’ households, and often not in the same city or town—is a fundamental measure of economic and social advancement and mobility. The United States through the 19th Century and early 20th Century had a household formation rate unequalled in history by any nation or region; connected to that, it also exhibited an extraordinarily high rate of formation of new cities and towns, representing both transportation infrastructure and emergence of new economic sectors and industries.

Currently a comparison with China’s economic progress can be made. Approximately $1.1 trillion was spent on new home sales in China in 2016, compared to $200 billion in United States. This represented about 10 million new units in China, compared to 550,000 units in the United States: a ratio of 18:1 compared to a population ratio of 4.32:1 between the two countries). There were 11 million first-time marriages in China in 2016, compared to 2 million in United States; a ratio of 5.5:1).