How GDP May Propel Boise Real Estate

March 3rd, 2010 | Author: Gavin J. King

Hopes soared on reports that the recession was coming to a close as the United States economy posted a healthy 5.9% gain and businesses invested to boost GDP. Boise real estate always depends on the national economic trend, so good news will help out.

In its second reading of fourth-quarter gross domestic product, the Commerce Department said the economy grew at a 5.9% annual rate, rather than the 5.7% pace it estimated last month. Not since summer of 2003 have we seen such a rapid pace of growth in GDP. The fastest quarter was the third quarter which posted a robust 2.2% growth rate. The Boise real estate market will see some benefit from these increases, plus other local market factors.

Analysts polled by Reuters had forecast GDP, which measures total goods and services output within U.S. borders, growing at a 5.7% rate in the October-December period. Not since the Great Depression of the 1930′s has the country seen this bad of a downturn, and it seemed like we were emerging in 2009 with the latter half of that year posting impressive numbers, but that has tailed off quite a bit in the initial months of 2010. A sharp brake in the pace at which businesses liquidated inventories combined with increased spending on equipment and software to boost growth in the fourth quarter, offsetting lackluster consumer spending and residential investment. Being part of the fabric of the national economy, Boise real estate definitely had similar results.

Growth was projected to be about 2.2%, but has been revised down to about 1.9%, which shows that growth has been due to reduced inventories and not so much a return of market demand. Inventory sales amounts were alarmingly reduced from $33.5 billion to around $16.9 billion in the final quarter. From July to September alone, they slid just over $139 billion. The change in inventories alone added 3.88 percentage points to GDP in the last quarter. Such a dramatic increase has not been seen since the final quarter of 1987. With so many suppliers eliminating excess inventory, builders in the Boise real estate market were helped out.

As a whole, the year 2009 featured the most dramatic decrease in GDP, at 2.4%, since the post World War II recovery of 1946. Even consumer spending projections had to be adjusted downward from 2% in January to the actual number of 1.7% increase. In the preceding quarter, the federal government “cash for clunkers” program lifted GDP by 2.8%, which was obviously a short term fix for a sector of the economy. In the fourth quarter, consumer spending – which normally accounts for about 70% of U.S. economic activity — contributed 1.23 percentage points to GDP. In such a financial crisis, the Boise real estate market is not independent of the national trends.

Businesses continued to invest in equipment and necessary software at such a rate that the commercial real estate slump was not a cause of negative number in the Gross Domestic Product in the fourth quarter. With business investment being much higher than the projected 2.9%, at 6.5% actually, improvement is on the way. In the preceding three months, it had slid by about 5.9%. Spending on new home construction grew at a slower 5% rate in the fourth quarter, instead of 5.7% estimated last month. Posting an increase of just under 19% in the third quarter, there was quite a disparity between quarters. The fourth quarter closed out with imports and exports showing stronger growth than expected, and contributing a .3% gain for the GDP, according to data sources. With GDP factoring in to nearly every facet of business, Boise real estate is not independent.

The author enjoys writing articles about boise real estate & Boise Idaho real estate. To learn more about these topics click on the links above! Get a totally unique version of this article from our article submission service

Forclosed Homes Today

How GDP May Propel Boise Real Estate