RSS Feed by Calculated Risk on 11/01/2012 02:02:00 PM
Thursday, November 01, 2012
Q3 2012 GDP Details: Office and Mall Investment very low, Single Family investment increases
The BEA released the underlying details for the Q3 Advance GDP report.
The first graph shows investment in offices, malls and lodging as a percent of GDP. Office, mall and lodging investment has increased slightly, but from a very low level.
Investment in offices is down about 59% from the peak (as a percent of GDP). With the high office vacancy rate, investment will probably not increase significantly (as a percent of GDP) for several years.
Click on graph for larger image.
Investment in multimerchandise shopping structures (malls) peaked in 2007 and is down about 61% from the peak (note that investment includes remodels, so this will not fall to zero).
Lodging investment peaked at 0.32% of GDP in Q2 2008 and is down about 74%.
The second graph is for Residential investment (RI) components as a percent of GDP. According to the Bureau of Economic Analysis, RI includes new single family structures, multifamily structures, home improvement, broker's commissions, and a few minor categories (dormitories, manufactured homes).
Usually the most important components are investment in single family structures followed by home improvement.
Investment in single family structures is finally increasing after mostly moving sideways for almost three years (the increase in 2009-2010 was related to the housing tax credit).
Investment in home improvement was at a $155 billion Seasonally Adjusted Annual Rate (SAAR) in Q3 (just under 1.0% of GDP), still above the level of investment in single family structures of $131 billion (SAAR) (or 0.8% of GDP). In the next year or two, single family structure investment will overtake home improvement as the largest category of residential investment.
Brokers' commissions increased slightly in Q3 as a percent of GDP. And investment in multifamily structures increased in Q3. This is a small category, and even though investment is increasing, the positive impact on GDP will be relatively small.
These graphs show there is currently very little investment in offices, malls and lodging. And residential investment is starting to pickup, but from a very low level.
