Recent news headlines have suggested that the state and national economy will likely recover from "The Great Recession" without the construction sector. This is simply not possible.

Unfortunately, the U.S. housing market continues to contract, with home sales declining and inventory offered each month increasing. A 2011 report by the U of M Bureau of Business and Economic Research indicates, "Estimates of real estate valuation and debt-to-equity, suggest that U.S. residential property owners lost another $1.7 trillion dollars in value in 2010, for a total of $9 trillion dollars since the 2006 peak." That is a nine with 12 zeros! One out of five homeowners is strapped with a mortgage that is more than their house is worth.

According to the U.S. Department of Commerce, Bureau of Economic Analysis, total U.S. housing starts in 2006 recorded 1.8 million new construction units with roughly 25 percent of this construction in the west. As of July 2011, (just last month) total U.S. housing starts have dropped 34 percent to 604,000 new construction units and a respective 29 percent drop in the west. Closer to home, a report from the Montana Association of Home Builders indicates residential housing starts has declined 60% since 2007, a severe impact to our construction and lumber manufacturing industries.

Housing contributes to the Gross Domestic Product (GDP) in two fundamental ways: through private residential investment and consumptive spending on housing services. Residential investment includes construction of new single family and multi-family units, residential remodeling, production of manufactured homes, and fees associated with buying and selling of real estate investments. Consumption spending on housing services includes rent, utilities, and an owner's imputed rent of how much it would cost to rent owner-occupied units.

Historically, residential investment has averaged approximately 5 percent of the GDP while housing services has averaged between 12 and 13 percent, for a combined 17 to 18 percent contribution to the GDP. Residential and housing services, contributed 18.5 percent to the GDP in 2005, then dropped to 15 percent by the fourth quarter of 2010 and slipped even further, to 14.9 percent by the end of the first quarter in 2011, a loss of roughly $36 billion dollars in just over 5 years.

Even though nationally, paper products held their own until 2009, lumber products dropped from $30 billion dollars in 2006 to $21 billion dollars in 2009, according to a January 2011 report by the Bureau of Economic Analysis.

Even during the recession in the 1980's combined residential fixed investment and housing services contributed 19 percent to the GDP. Gross domestic product growth in the beginning of 1980 was a negative 0.3percent; GDP then rose to 4.1 percent in 1985 as the country worked its way out of a recession and fell again to 1.9 percent in 1990, causing worry of yet another recession. However, contributions to the GDP from construction and manufacturing stayed stable the entire decade. A robust construction and manufacturing industry has a direct impact on jobs and consumer confidence. One of the critical differences between the recession in the ‘80's and the current "Great Recession" is the prolonged lag in the housing industry. Montana's primary wood and paper products sector has lost roughly 4,000 jobs since 2004. The majority of these losses occurred between 2009 and 2010. At an average annual wage of $45,000 dollars, and using the standard 1.2-economic multiplier factor, the loss to Montana's economy and our forest products industry is approximately $214 million dollars.

Too many foreclosures and a tightening of the mortgage underwriting regulations have created quite a mess. It is far better to find ways to keep people in their homes through refinancing opportunities and federal assistance or incentive programs, than to add more foreclosures to the already 1.6 million homes that are now bank owned. It will take years to get through the glut in the foreclosure market. Adding more is not the answer. New housing starts creates jobs, products and markets. The lesson of the past recessions is that new construction and lumber manufacturing serve to lessen the length and severity of a downturn in the economy and bolsters consumer confidence.

As the newly appointed debt, "super committee" tackles the monumental task of cutting $1.5 trillion dollars from the federal deficit over the next 10 years; I hope the committee takes into consideration the vital contribution, housing, construction and lumber manufacturing provides.

With all due respect, a construction-less economic recovery is not only unlikely, in my opinion, is simply not possible!

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