by Calculated Risk on 1/08/2007 01:27:00 PM

Caroline Baum writes for Bloomberg: Housing Data Yield a False Sense of Complacency. Some excerpts on non-residential construction:

The increase in non-residential construction has helped to offset the decline in housing... Typically commercial activity lags residential -- and the economic cycle. And it makes intuitive sense.

``Once a new subdivision is built and people move in, they look for places to work, shop, eat and have their dry-cleaning done,'' said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York. ``That's when the new strip malls, schools, churches and office parks start to appear.''

The lag between turning points in residential and non- residential construction is variable, Shepherdson said, but one follows the other as night follows day.

``The plunge in housing construction promises tough times ahead, sooner or later, for the non-residential construction business,'' he said.