The media is off and running with the news today about the decline in third quarter GDP reported today by the BLS at -0.3% - in all honesty – that number will probably get revised further downward. 

Here’s a link to the full report from the BEA. 

The BEA summary –

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — decreased at an annual rate of 0.3 percent in the third quarter of 2008,(that is, from the second quarter to the third quarter), according to advance estimates released by the Bureau of Economic Analysis.  In the second quarter, real GDP increased 2.8 percent.

The decrease in real GDP in the third quarter primarily reflected negative contributions from personal consumption expenditures (PCE), residential fixed investment, and equipment and software that were largely offset by positive contributions from federal government spending, exports, private inventory investment, nonresidential structures, and state and local government spending.  Imports, which are a subtraction in the calculation of GDP, decreased.

Most of the major components contributed to the downturn in real GDP growth in the third quarter.  The largest contributors were a sharp downturn in PCE for nondurable goods, a smaller decrease in imports, a larger decrease in PCE for durable goods, and a deceleration in exports.  Notable offsets were an upturn in inventory investment and an acceleration in federal government spending.

Bloomberg has some interesting commentary posted regarding the release here, noting the 6.4% rate of decline in spending on non-durable goods was the most impressive since 1950. 

Jake at Econompic has some charts illustrating the data today…..

What does it mean for real estate investors?  As the economy slows, the negative feedback loop between a sagging economy and struggling housing will likely intensify – there’s still a long way for some single family markets to correct.  Savvy multifamily investors are gearing up to chase appropriate projects in markets with good fundamentals and struggling single family……

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