Today, the Bureau of Economic Analysis (BEA) released their first installment of the Q3 2007 GDP report showing a better than expected growth rate of 3.9%, buoyed by strength in, among other things, nonresidential structures, outstanding exports of goods, and federal, state and local government spending while continuing to be weighed down by tremendous weakness 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, renewed its historic fall-off registering a whopping decline of 20.1% since last quarter while shaving 1.05% from overall GDP.
Housing continues to be, by far, the most substantial single drag on GDP subtracting an amount greater than the contributions made by all personal consumption of durable (cars, furniture, etc.) and non-durable goods (food, clothing, gasoline, fuel oil) during the quarter.
The following chart shows real residential and non-residential fixed investment versus overall GDP since Q1 2003 (click for larger version).