The latest U.S. Census Bureau data shows building permits at 1.312M—the lowest since the COVID era and the fourth miss in five releases. As a leading indicator for the economy and real estate, this downward trend in permits is raising eyebrows. Why it matters:
- Declining permits often precede economic weakness and recessions. Historically, sustained drops signal reduced construction activity, impacting jobs, materials, and growth.
- Market implications: When permits trend lower with fading momentum (like now), equities tend to underperform, while fixed income often outperforms over the next 12 months.
While permits can be noisy, the longer-term trend is critical for investors and policymakers. This isn’t a standalone signal, but it’s a vital piece of the economic mosaic shaping investment strategies.
