Saturday, October 30, 2010

Residential Investment declines to new low as Percent of GDP

by Bill McBride on 10/30/2010 04:45:00 PM

A couple more graphs ...

Residential Investment Click on graph for larger image in new window.

I'll break down Residential Investment (RI) into components after the GDP details are released this coming week. Note: Residential investment (RI) includes new single family structures, multifamily structures, home improvement, broker's commissions, and a few minor categories.

It is interesting to note that RI as a percent of GDP has declined to a post war low of 2.22%. Some people have asked how could a sector that only accounts for 2.2% of GDP be so important? The answer is that usually RI accounts for a large percentage of the employment and GDP growth in the first year or so of a recovery. Not this time.

non-Residential InvestmentThe second graph shows non-residential investment in structures and equipment and software.

Equipment and software investment has been booming, and non-residential investment in structures is near a record low.