Will housing save America's economy?

By R.A. | WASHINGTON

BACK in February of 2009, Paul Krugman was worrying about an insufficient policy response to the recession and he pondered the question: if America is to muddle through with too little stimulus, then how will growth return?

[R]ecovery comes because low investment eventually produces a backlog of desired capital stock, through use, delay, and obsolescence. And eventually this leads to an investment recovery, which is self-reinforcing.

And what do we mean by use, delay, etc.? Calculated Risk had a nice piece on auto sales, which I find helps me to think about this concretely. As CR pointed out, at current rates of sale it would take 23.9 years to replace the existing vehicle stock. Obviously, that won't happen. Even if the desired number of vehicles doesn't rise, people will start replacing vehicles that wear out (use), rust away (decay), or just are so much worse than newer models that they're worth replacing to get the spiffy new features (obsolescence).