by Calculated Risk on 4/29/2024 03:02:00 PM

The BEA released the underlying details for the Q1 advance GDP report on Friday.

The BEA reported that investment in non-residential structures decreased at a 0.1% annual pace in Q1.  

Click on graph for larger image.

The first graph shows investment in offices, malls and lodging as a percent of GDP.

Investment in offices (blue) increased slightly in Q1 and was up 4.1% year-over-year.  And declined slightly as a percent of GDP.

Investment in multimerchandise shopping structures (malls) peaked in 2007 and was down about 1% year-over-year in Q1.   The vacancy rate for malls is still very high, so investment will probably stay low for some time.

Lodging investment decreased in Q1 compared to Q4, and lodging investment was up 1% year-over-year.

All three sectors - offices, malls, and hotels - were hurt significantly by the pandemic.  And the office vacancy rate is at a record high, and this will hold down office investment.

The second graph is for Residential investment components as a percent of GDP. According to the Bureau of Economic Analysis, RI includes new single-family structures, multifamily structures, home improvement, Brokers’ commissions and other ownership transfer costs, and a few minor categories (dormitories, manufactured homes).

Investment in single family structures was up to $433 billion (SAAR) (about 1.5% of GDP) and was up 16% year-over-year.

Investment in multi-family structures was down in Q1 compared to Q4 to $133 billion (SAAR), but still up 12% YoY.

Investment in home improvement was at a $351 billion (SAAR) in Q1 (about 1.2% of GDP).  Home improvement spending was strong during the pandemic but has declined as a percent of GDP recently.

Note that Brokers' commissions (black) increased sharply as existing home sales increased in the second half of 2020 but declined when mortgage rates increased.   Brokers' commissions were up 3% year-over-year in Q1.