Residential Investment (RI) made a small positive contribution to GDP in the second half of 2009, but was a drag in Q1 2010. The rolling four quarter change is moving up, but as expected there has been no strong boost to GDP from RI.Equipment and software investment has made a positive contribution to GDP for three straight quarters (it is coincident).
Nonresidential investment in structures continues to be a drag on the economy, and as usual the economy is recovering long before nonresidential investment in structures recovers.
The key leading sector - residential investment - is lagging the recovery because of the huge overhang of existing inventory. Usually RI is a strong contributor to GDP growth and employment in the early stages of a recovery, but not this time - and this is a key reason why the recovery has been sluggish so far.
“Passion and prejudice govern the world; only under the name of reason” --John Wesley
Sunday, May 2, 2010
Calculated Risk on residential investment
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment