population growth and household formation will eventually force a recovery in durable goods sales (autos) and home contruction. But furthermore, small level changes can add a lot to GDP growth.
Think about it. New home construction in January was an anemic 466k (which is an annual rate), down a whopping 17% in just one month or 56.2% since one year ago. Impressively, residential construction was just 3.1% of GDP in the fourth quarter of 2008 (Q4 2008), but still snatched 0.85% from overall economic growth (the contribution to growth table here). Since residential construction is nearing zero, small level increases of new construction means big percentage changes and large contributions to GDP growth. Same for autos.
So as soon as homebuilders and automakers get going again, then GDP (domestic production) has a chance at stabilization. But when will that happen? When will the pain stop?
Sunday, February 22, 2009
News N Economics: When will the economic storm calm?
News N Economics: When will the economic storm calm?
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment