Consumer and investor confidence dipped this past month. This, along with the other recent soft economic indicators, has led some analysts to lower GDP projections for 2015. So be it; let the predictions stand.

Me? I prefer to look past the month-to-month indicators. I look to indicators that are more long lasting, that are more predictive of a solid foundation for economic growth. One of those is real estate, a broad category, but because that, the far reaching fingers, the growth or non-growth is far more predictive of economic health.

  • After shacking up with family or friends for the past few years, millennials finally seem to be striking out on their own.

One category in the broad real estate sector is rentals, and when one ties rentals to a class of folk that has been reported as underemployed, well, that is something to look at. The most recent census data suggests millenials, those kids living in their parents’ basements because they could not put their college education to use in a good-paying job might finally be moving out of the basement because they are now putting their college education to use in a good-paying job.

  • Tuesday’s census data show that the households being formed these days are rentals. Renter-occupied homes climbed by 1.87 million in the first quarter from a year ago, while owner-occupied units fell by 386,000.

Okay rentals are up and that is a good thing, as it means folks will be filling their apartments with furniture, coffee-makers, and towels, but a drop in owner-occupied homes is not good, right? Well, perhaps it is not about who owns or rents, but rather who is moving out of the home, say, out of their parents’ basements.

  • The number of households grew by 1.48 million in the first quarter from a year earlier, following a 1.66 million increase in the final three months of 2014, according to data released Tuesday by the Census Bureau. While the numbers can be volatile, it marks the fastest back-to-back gains in household formation since the second half of 2005.

Now, that is an impressive statistic, and it takes us back to the number of owner-occupied homes that dropped in the first quarter. Is that an anomaly that will soon be corrected?

  • Despite decreasing affordability for houses next year, expect more home sales in 2015 — in part due to increased purchases by millennials who are finding jobs and expanding their families.

So, millenials are finding jobs, moving out of their parents’ basements, and either buying or renting a home. That has to be good for the economy.

  • The unemployment rate for Americans between 25 and 34 hit 6.1% in November, the Labor Department reported Friday. That’s the lowest level since July 2008.
  • In general, jobs for those younger than 35 years old are being created at a faster pace this year, said Jonathan Smoke, chief economist of Realtor.com, which released its 2015 housing forecast earlier this week.

But what about that “expanding their families” thing just mentioned. How does that all play into my premise that the US economy is on solid footing for the future?

  • What’s more, we’re at the beginning of a mini baby boom, prompting more millennial parents to seek homes large enough for them and their offspring, Smoke added.
  • The last huge spike in births was in 2007, when a record high number of births were reported (4.32 million), according to data from the National Center for Health Statistics.

More families, more stability, more employment, more money, more spending, all means more contribution to an expanding economy. Ergo, even if consumer and business confidence dipped in April, it might soon go back up, if the surveys start asking the millenials who are finding good jobs and the asking the employers who are hiring them.

So, I guess we won’t have the millenials to kick around anymore. Soon, those who have used the turn-of-the-century generation to argue that the US economic growth in the past six years has been weak and ineffectual – re: producing good-paying jobs for the fresh-out-of-college crowd – they will have to let go of that now defined canard.

  •  “The tired old story that millennials are unemployed and living with their mom and dad — those circumstances have changed quite a bit in 2014,” Smoke said.

I guess the bigger picture stats will trump the month-to-month myopia of the breathless media and its talking-head minions, at least I think so anyway.

Trade in the day; invest in your life …

Trader Ed