Friday, April 27, 2007

GDP Report: Q1 2007 Advance

Today, the Bureau of Economic Analysis (BEA) released their first installment of the Q1 2007 GDP Report showing truly anemic growth weighed down by continued weakening to fixed residential investment.

Residential fixed investment, that is, all investment made to construct or improve new and existing residential structures including multi–family units, continued its historic fall-off registering a decline of 17.0% since last quarter while shaving .97% from overall GDP resulting in the slowest quarterly growth since Q1 2003.

Additionally, non-residential investment continues at a slower pace registering the second smallest quarterly growth since Q1 2004.

Housing continues to be, by far, the most substantial drag on GDP subtracting an amount roughly equivalent to the contributions made by ALL durable and non-durable goods including food, clothing, gasoline, fuel oil, motor vehicles, furniture, and household equipment, all the way to aircraft during the same period.

Keep in mind that the initial GDP reports are highly revised so it seems likely that the coming reports (Q1 preliminary and Q1 final) will further capture the historic housing market weakness seen in the first three months of 2007.

The following chart shows real residential and non-residential fixed investment versus overall GDP since Q1 2003 (click for larger version).


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