We study the extent to which the U.S. housing boom and subsequent housing bust during the 2000s masked (and then unmasked) the sharp, ongoing decline in the manufacturing sector. We exploit cross-city variation in manufacturing declines and housing booms and jointly estimate the effects of both shocks on local employment and wages. Between 2000 and 2007, we find that a one standard deviation negative manufacturing shock increases the non-employment rate of non-college men by 0:9 percentage points, and a one standard deviation positive housing price shock is enough to fully offset this effect. We find that roughly half of the 'offsetting' comes from increased construction employment and that other demographic groups are affected by both shocks, as well, though to a lesser extent. We also find that positive housing price shocks significantly reduce college enrollment, with the largest effects concentrated among community colleges and junior colleges. Finally, we use our estimates to assess how aggregate employment would have evolved absent the housing boom/bust cycle, and we find that roughly 35 percent of the increase in nonemployment between 2007 and 2011 can be attributed to the decline in manufacturing employment during the 2000s. In particular, we find that much of the recent increase in non-employment would have occurred earlier had it not been for the large temporary boom in local housing prices.