Fifteen years ago one of Friedman’s flatteners, the Netscape web browser, inspired me to drop out of college to start a technology company that eventually became part of AutoNation (NYSE: AN). Two years ago I finished a tour with Oracle Corporation that acquired my third technology company. Many of Friedman’s flatteners are technology related including Workflow software, Uploading and Search Engines so I might be a prime candidate to witness the world flattening.
What if something as tangible as the American home, including the number of privately owned new homes on which construction has been started (housing starts), is really the center of the economy making the world not so flat? It’s not counterintuitive when you think about all of the commerce that flows to and from the home. In 1973, housing starts plunged before the stock market plunged in 1974 and unemployment spiked dramatically. In 1975, when housing starts recovered in a classic ‘V’, unemployment immediately peaked and fell. The same pattern is evident in the early 80s and 90s. And, strikingly, the same inverse correlation between housing starts and unemployment in times of severe recession appears in Canadian, Japanese and United Kingdom cycles!
In 2006, housing starts plunged before the stock market plunged in 2008 and unemployment spiked dramatically. Now that housing starts have bottomed in April 2009, we should expect to see the completion of the cycle that is a quick peak and decline in unemployment (8% by end of 2010).
Read more at Jon Fisher’s Blog
