There are, in my view, good reasons to believe that the economy will continue to gain strength. I would point in particular to the housing sector, which in prior recoveries has been an important engine of growth. For the first two years of the current recovery, housing contributed nothing to growth, as housing investment hovered at extremely low levels.
House prices declined sharply through most of 2011, wiping out about half of home equity and restraining consumer spending. But the housing market finally began to recover in early 2012, and that recovery seems to be proceeding strongly. Single-family housing starts have risen by more than 40 percent over the past two years, albeit from a low base.