Confidence in the efficiency of the markets has been severely shaken by the financial crisis and many financial market products have failed to demonstrate that they promote macroeconomic welfare. Now, financial market regulation is being tightened because the negative macroeconomic consequences of financial crises have moved into the spotlight again.
Although the data on April housing starts and permits look promising, the current level of single-family housing permits is little changed from the level in the fourth quarter of last year, and average growth in residential investment over the past year and a half has been tepid.