Friday, April 27, 2007

Residential Investment as Percent of GDP

by Bill McBride on 4/27/2007 10:01:00 AM

MarketWatch has the headlines: GDP slows to 1.3% growth in first quarter, Inflation rages at fastest pace in 16 years, data show

Housing Starts Sales InvestmentClick on graph for larger image.

This graph shows Residential Investment as a percent of GDP since 1960. The median is 4.5% of GDP. Currently RI is still above 5% of GDP.

RI peaked at 6.3% in the second half of 2005.

If this housing bust is similar to previous busts, RI as a percent of GDP will bottom in the 3.5% to 4.0% range.

More on investment soon.