New Home Prices Say What’s Different This Time

June 13 (Bloomberg) -- Although no two business cycles arealike, most share some common characteristics. The interest-rate-sensitive sectors of the economy -- housing andmanufacturing -- tend to lead on the way up and the way down,for obvious reasons. Inflation ebbs during the recession and inthe early stages of the recovery. Credit creation drives theupswing.

The recovery from the 2007-2009 financial crisis has beendifferent all around, just as Harvard economists Carmen Reinhartand Kenneth Rogoff predicted in their 2009 book, “This Time IsDifferent: Eight Centuries of Financial Folly.” It has been a“protracted affair,” featuring extended declines in assetmarkets, large contractions in output and employment, and anexplosion of government debt: three characteristics common tothe aftermath of financial crises.