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- Mar
Businesses increased investment, helping out GDP, and the economy grew at a 5.9% interest helping reinforce the idea that the recession is coming to an end. As goes the nation, so goes the Boise real estate market, so this news is good to local industry insiders.
With Gross Domestic Product growth projected at a satisfying 5.7%, based on Commerce Department data from the 4th quarter, but actually came in at 5.9%, surpassing many expectations. Not since summer of 2003 have we seen such a rapid pace of growth in GDP. The economy expanded at a 2.2% annual rate in the third quarter. 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. With the recovery seemingly in full swing in the last few months of 2009, our nation seemed to be emerging from the most severe financial crisis since the Great Depression, but that growth has been stymied somewhat in the first quarter 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.
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. Business inventories fell only $16.9 billion in fourth quarter instead of $33.5 billion estimated last month. They dropped $139.2 billion in the July-September period. The inventory changes alone were responsible for a 3.88% difference in GDP. This was the biggest percentage contribution since the fourth quarter of 1987. As home materials companies liquidated inventory, Boise real estate reaped some benefit from that.
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. In the final three months of 2009, consumer spending increased at a 1.7% rate, rather than the 2% pace reported in January. That was below the 2.8% rate in the prior quarter when consumption got a boost from the government’s “cash for clunkers” auto purchase program. In the fourth quarter, consumer spending – which normally accounts for about 70% of U.S. economic activity — contributed 1.23 percentage points to GDP. As the national economy contracted, the Boise real estate market contracted right along with it.
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. Increases in business investment, from a projected 2.9% to a 6.5% actual pace helped out a lot. In the preceding three months, it had slid by about 5.9%. With everyone watching the housing markets, projections of 5.7% were down graded to about 5% in the fourth quarter. With growth as high as 18.9%, the third quarter was a busy one. 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 GDP factoring in to nearly every facet of business, Boise real estate is not independent.
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