Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses GDP, consumer spending and consumer sentiment.
-
GDP, which measures total production in the country, rose 2.8 percent in the fourth quarter. Another interpretation is that the income of everyone and every company combined rose 2.8 percent on an annualized basis.
-
Consumer spending added to the growth, as well as business spending on equipment and structures. Housing finally made a positive contribution because of some gains in housing starts and existing home sales in the fourth quarter. But a sharp reduction in government spending, particularly related to federal defense spending, held back GDP. State and local government spending fell somewhat, while federal non-defense spending rose.
-
A big data point to watch out for is large inventory addition. More inventory addition is counted as a positive contribution to GDP. However, it also means that the next quarter GDP will likely get reduced because of the natural expected inventory pull back by companies.
-
Today’s GDP was decent with 2.8 percent growth. But the GDP in the first quarter could be quite slow, rising by only 1 to 2 percent. The historical average GDP growth rate is 3 percent. Very interesting economic dynamics are ahead in an election year generating a decent but not robust economic growth.
-
Separately, consumer sentiment survey by the University of Michigan made further gains in January. The sentiment level is still below the pre-recession levels but it has been steadily making gains for 5 straight months.
Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.
About Us
