Housing market holding back economic recovery, report suggests

Despite a number of economic improvements during January, the housing market continues to be a key factor holding back a faster recovery.

Despite a number of economic improvements during January, the housing market continues to be a key factor holding back a faster recovery.

According to economic and real estate data collected by the Federal Reserve Bank of Chicago, its National Activity Index remained positive during the month. The index is a comparison of inflationary pressures set against economic growth and indicated improvements for the second consecutive month.

Although the index continues to show improvements, it dipped slightly to a reading of 0.22 in January - a drop from 0.54 in December. While this is still in positive territory, the index shows that the rate of improvement slowed during the first month of 2012.

This slow can be largely contributed to data from the consumption and housing portion of the index which remained in negative territory at 0.27 during the month. However, despite still being weak, this was an improvement from December when the index was at negative 0.3 - indicating that the housing market is still a variable holding back the economy.

Meanwhile, the report found that housing and consumption were the only parts of the index to remain negative, as production, income, employment, sales orders and inventory all showed positive growth.



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