State of Business: Building Up?

The U.S. construction market is about as confused as a husband on moving day.

Since last October, the number of new houses started each month has dramatically declined—but applications for permits to build houses have steadily increased (see chart). Which of these "indicators" really foreshadows the future is a matter of vital importance to the U.S. economy, for construction now accounts for one-ninth of the gross national product.

Changing Rules. Optimists argue that the statistics on housing starts, although weighted to take into account the normal winter slump in building, do not make proper allowance for the fact that the...

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