- 20
- Mar
The U.S. economy grew faster than initially thought in the fourth quarter as businesses drew down inventories at a much slower pace and boosted investment, a government report showed on Friday. As the recession eases Boise real estate will be helped out by the positive news.
With the Commerce Department using fourth quarter numbers to project a sound 5.7% increase in GDP, many onlookers were pleasantly surprised to see the actual numbers slightly higher at 5.9%. It was still the fastest pace since the third quarter of 2003. In the third quarter alone the economy increased by another 2.2%. Rewinding time to the 2003 numbers would definitely help the Boise real estate market.
Major news agencies had indicated that the latter portion of 2009 posted a projected growth of 5.7%, including a total of all products and services inside United States borders. 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. This wan’t just a national trend either, as the Boise real estate market saw very similar changes in volume as well.
The initial projections for GDP growth indicated a 2.2% increase, but that has been revised down to about 1.9%, with inventory liquidations and lack of demand bringing some balance. Business inventories fell only $16.9 billion in fourth quarter instead of $33.5 billion estimated last month. Throughout the latter portion of the summer, inventory sales plummeted to $139 billion. The inventory changes alone were responsible for a 3.88% difference in GDP. Since 1987, inventories had not influenced GDP in such a substantial way. A big lift came to the Boise real estate market through the liquidation of these extra inventories by construction companies.
For the whole of 2009, the economy contracted 2.4%, the biggest decline since 1946, the department said. 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. The disappointing news came from the consumer spending sector which added only a 1.23% GDP gain, which is low considering it is normally about 70% of GDP. As the national economy contracted, the Boise real estate market contracted right along with it.
The department confirmed robust spending on equipment and software caused business investment to grow for the first time since second quarter of 2008, despite a drop in spending on commercial real estate. Estimates for business investment came in at 2.9%, but rose dramatically to 6.5%, much higher than expected. In just the three months prior, it had slumped by just under 6%. With everyone watching the housing markets, projections of 5.7% were down graded to about 5% in the fourth quarter. In the third quarter it had posted a tremendous 18.9%. On the back of stronger exports and imports, which left a trade gap adding .3% to the GDP, the fourth quarter boasted better numbers than otherwise anticipated. With factors that effect Boise real estate and GDP, we are all eager to see a resolution to this crisis.
The author enjoys writing articles about boise real estate & Boise Idaho real estate. To learn more about these topics click on the links above! Don’t reprint this exact article. Instead, reprint a free unique content version of this same article.
