The housing bubble trouble can be considered an indicator of the future of the nation’s economy.

It stands to reason when reviewing the current state of the housing industry that American have been spending more then what they are bringing in.

Much of the economic growth since 2001 can be attributed to the housing industry.

Jobs were created in a variety of fields including construction, finance, and real estate to name a few.

Over a five year span from 2001 to 2006 Americans had withdrawn and spent approximately 2.5 trillion dollars giving cause to the economic success during that span (since GDP is primarily accounted for by consumer spending).

The success in the industry led to a boom in construction, meaning a creation of jobs and an increase in consumer spending.

All appeared to be well on the face of the economy until the potential of a housing bubble trouble arose.

Eventually all the spending will catch up with Americans, prices will flatten and fall, and the industry and several that are dependent on it will falter in dramatic fashion.

Many policy makers and pundits were not sure what to think resulting in a number of different theories.

Some believed that economic forces were just playing out and in time everything would be just fine.

Others took a look at the 80 percent decline in the NASDAQ (as of 2006) and were legitimately scared of what the future may hold.

As long as the policy makers and pundits argued theory back and forth house prices continued to raise in the short term as did the level of American consumer debt.

HOUSING BUBBLE

PRICES

The crux of the housing bubble argument laid in the prices houses were selling for.

If the rise in prices could be attributed to normal economic fundamentals than there would be no reason for worry with the 82 percent increase in mortgage debt from 2001 to 2006.

However, the evidence is leading more towards housing bubble trouble with more than forty percent of the housing market overvalued by at least fifteen percent.

This discrepancy in value will eventually self correct meaning a few years of dramatic decline in prices, construction, work in general as it relates to the housing industry.

DENIAL

In 2006, many economic figures tried to explain away the foreseen trouble as not economically possible.

In the short term the boom in jobs and income was seen as a major positive and no one wanted to discourage further growth from happening.

What these experts failed to realize as the housing industry was over pricing itself the eventual fall out would be uncontrollable and even harder to bear then the good times were enjoyed.