The longer I stare at figures like this, the more impressed I am with how well Say's Law worked between the peak of the housing boom in the third quarter of 2005 and the start of the recession in the first quarter of 2008.
Housing construction (and government purchases) sit down. Exports, equipment investment, and nonresidential construction stand up. Even as of 2008:III, the sum of the components of autonomous spending was only 0.7% of potential GDP lower than trend.
It is in the next three quarters to 2009:II that the autonomous spending shortfall grows swiftly to -5.6% of GDP.
This makes me suspicious of accounts of the Lesser Depression that rely on the loss of household wealth in the collapse of the housing bubble as a big explanation. At the very least, such explanations need to be supplemented by an account of why the damage done by real-estate losses' effects on household balance sheets was not linear. It also makes me even more suspicious of "Austrian" accounts. For the first three years after the peak of the housing bubble, redeploying labor out of housing construction imposes no requirement that other sectors shrink: rather the reverse: they grow.