Skip to comments.Housing Expected to Add to GDP
Posted on 02/23/2012 6:03:36 AM PST by JimRed
]The 2012 outlook is improving modestly from a disappointing 2011. Economic growth picked up in the fourth quarter of 2011 to 2.8 percent and is expected to come in at 2.3 percent for 2012, up from 1.6 percent growth for all of last year, according to Fannie Maes (FNMA/OTC) Economic & Strategic Research Group. However, the year-end growth rate was due largely to a positive swing in business inventory growth, which is not indicative of underlying consumer demand or the overall health of the economy. Nevertheless, consumer spending improved modestly and manufacturing and services activity expanded at a strong pace. Importantly, labor market conditions continued to improve with nonfarm payroll job growth increasing nearly 250,000 across many industries, including construction. The unemployment rate dropped to 8.3 percent, down from 8.5 percent the month prior, as the large increase in employment outweighed a growing number of people joining the workforceindicating a genuine improvement in the labor market. If we continue to see this level of positive data, the Group notes, the labor market may become an upside determinant for an improved outlook.
Housing also showed signs of improvement late last year with existing home sales rising in December for the third consecutive month. Indicators point to some good pickup in construction of apartment buildings and modest pickup in single-family construction in some locations. Overall, housing is expected to add to gross domestic product (GDP) for the first time in seven years, albeit by a very modest amount. Near-term improvement in housing sales is expected to be quite modest due to the very low current level of sales and continued expected declines in home prices, which remain a challenge to the housing market.
Risks to the forecast are more balanced between the upside and downside since our January forecast, says Fannie Mae Chief Economist Doug Duncan. The economy appears to be more resilient than in previous months, and should be less vulnerable to shocks, including any spillover from the European sovereign debt crisis. However, economic growth will remain constrained by various headwinds, such as a potential spike in oil prices due to tension in the Middle East; an expected decline in net exports from the global slowdown; and an expected increase in fiscal drag, including the fading of federal spending from the stimulus and a decline in defense spending for operations in Iraq and Afghanistan.
For more information, visit www.fanniemae.com .
But wait- consider the source. Fannie Mae is not a trustworthy organization, it is in the tank for Obama. And as we all know, the 8.3% unemployment is a fiction based on not counting another 3-5% who are "out" of the job market.
A not so transparent attempt to enable Obama's reelection.
Of course. All the people who have had their homes foreclosed have to live somewhere, right? The new American Dream is to find a decent apartment. Thanks Obama!
For more information, visit www.fakiemae.com
Like They are going to tell the US public the truth...
Yep, like my comment said-
Fannie Mae is not a trustworthy organization, it is in the tank for Obama.
And implementation of U.N. Agenda 21 is going to require lots of Soviet style apartment blocks, to get the people (remaining after the purges) off the land and into controllable locations...
There is very little doubt that the housing sector is improving. Of course it is improving off all-time lows (average 6000,000 housing starts over last 3 years where the 50 year average is 1.5 million). The expectations are for starts to be around 750,000 this year which is great growth from a percentage basis off such low lows. Even at 750K we are still just half of the historic average.
Now, from where does the 1.5 million come? household formation has averaged 1.2 million over the past 50 years. the remainder of the q.5 million comes from second homes, teardowns, fire replacements, etc. the underlying demographics support the number.
The job markets are improving (again, off an incredibly low base) and that is leading some additional household formation to occur as that number has been far below the long-run average.
Even if we grow 25% from 600K starts to 750K starts it’s such a low number that it won’t make that much of an impact on GDP. IHS Global Insight predicts that 750K starts will affect GDP by 0.2% in FY2012.
Is that a real website? It doesn't load.
Everyone in those agencies is worried if obumbler is gone then so too are their jobs.
Affirmative action standards...things are greatly improving!
Where’s the link?
I don’t know.
This is crazy
Crazy, indeed; that’s why I posted it.