The role that real estate plays in the U.S. economy cannot be overstated. It is a driving force that can set off or start a recession. Economists do not debate the impact of real estate. Real estate is the major asset of most families. As such, it is the core driver of their personal finances. Economists realize that consumer spending is the ultimate measure of an economy.

The relationship between real estate and consumer spending is intimate. As the primary source of wealth for American families, consumer spending is driven by home equity loans. 70 percent of the economy comes from personal consumption. When consumers reduce their spending, both income and employment suffer. But, the impact of low consumer spending is even worse than what it appears on the surface. As income and employment falls, now consumers are less concerned with available equity than with the money they no longer have in their pockets.

If this downward spiral was not bad enough, there are other impacts to the economy. Construction comprises over $1.3 trillion of the national economy. It has approached 10% of the entire U.S. gross domestic product. As a labor intensive industry, real estate construction is one of the biggest contributors to the employment rate.

Commercial real estate is another factor. It is a direct and indirect creator of jobs. In addition to construction, commercial real estate is a place for retail and other business to conduct their operations. Manufacturing is also included here. So are apartment buildings. Essentially, the real estate industry directly impacts all types of business, especially brick-and-mortar.

The economic impact of the real estate industry is immense. Direct impacts include families, economic transactions, new properties, and business. Most families tie their nest eggs to their real estate holdings. Consumers spend money relative to their faith in the assets that they control and their ability to earn. When consumers lack the money or desire to purchase new properties, the people who make their livelihoods in construction subsequently suffer. Finally, without real estate, consumers do not have a place to shop or produce new goods. Real estate’s role in the U.S. economy can be considered as essential as money itself. While its impact might be slower than financial influencers, it is felt as strong as any.