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Thursday, May 01, 2008

Home Improvement Investment

by Calculated Risk on 5/01/2008 01:53:00 PM

The BEA released the supplemental tables to the GDP report this morning. One of the interesting details is real spending on home improvement.

Almost exactly one year ago, I wrote that home improvement investment was holding up pretty well (see What Home Improvement Investment Slump?) - and I didn't expect that to continue.

Home Improvement InvestmentClick on graph for larger image.

The BEA reports that real spending on home improvement fell 2% in Q1 2008 (from Q4 2007), and has fallen about 4% in real terms from the peak. This is probably just the beginning of the home improvement slump; if this housing bust is similar to the early '80s or '90s, real home improvement investment will slump 15% to 20%.

Note: This graph shows real home improvement investment (2000 dollars) since 1959. Recessions are in light blue with the current recession "probable". (source: BEA)