Recovery of the construction sector seems a necessary ingredient for a strong and sustained recovery of economic activity and a reduction in the unemployment rate.

This national outlook masks significant variation among states in their paths to recovery.

Despite the recent recovery in house prices, most state economies have yet to recover from the Great Recession.

The Fed’s concern for housing is a relatively new phenomenon. Historically, house price bubbles have been localized and affected only areas with rapid growth. The latest housing bust, however, was a nationwide problem with important ramifications for employment and economic activity.

While the data seem to suggest that lenders did the right thing by tightening standards and increasing denials...the ongoing financial crisis suggests that they did not tighten them enough.

When broken down by price level - high-priced, mid-priced, and lower-priced homes - the housing boom and subsequent implosion affected each tier differently.

Compared with previous recessions, the manufacturing sector does not show much slack. The construction sector, on the other hand, is below potential.

Current slack in the economy may be caused primarily by the construction sector.