Housing Is Not a Drag on the Recovery

The Morning Edition piece on President Obama's new mortgage refinancing proposal implied that the housing market is a major drag on the economy. This is misleading.

The housing bubble was the motor of the economy during the last business cycle. It did this both by leading to a construction boom and by propelling consumption through the creation of $8 trillion of ephemeral equity. Now that the bubble has burst it can no longer play this role, however it is inaccurate to describe it as a drag o...