The Economic Ingredients Behind the Boise Real Estate Market
Written by Gavin J. King on March 3rd, 2010
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. Based on this good news, the Boise real estate market will be buoyed by the gains in economy.
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. It is looking like the first quarter of 2010 will not continue in the rapid pace of recovery shown throughout 2009, which had posted the most impressive numbers since the worst financial catastrophe since the Great Depression. Even thought consumer spending and the housing markets were down, the fact that businesses increased investment in software and equipment helped add some steadiness to the economy and allowed business to liquidate bloated inventories. 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. 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.
For the whole of 2009, the economy contracted 2.4%, the biggest decline since 1946, the department said. Toward the end of 2009, consumer spending had to be reduced from the projected 2% to 1.7% in consumer spending. Although offset soon afterward, the \”cash for clunkers\” program drove GDP, by stimulating consumption, up by a respectable 2.8%. 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.
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.
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This entry was posted on Wednesday, March 3rd, 2010 at 8:32 am and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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