Economic Indicators Impacting Boise Real Estate
Written by Gavin J. King   
Saturday, 20 March 2010 07:19
Hopes soared on reports that the recession was coming to a close as the United States economy posted a healthy 5.9% gain and businesses invested to boost GDP. Boise real estate always depends on the national economic trend, so good news will help out.
by GavinJ.King


Hopes soared on reports that the recession was coming to a close as the United States economy posted a healthy 5.9% gain and businesses invested to boost GDP. Boise real estate always depends on the national economic trend, so good news will help out.

It was estimated that Gross Domestic Product would increase at a clip of 5.7%, instead it grew at a rate of 5.9% according to the Commerce Department, based on fourth quarter financial numbers. This is the fastest pace the GDP has grown since the middle of the year in 2003. The fastest quarter was the third quarter which posted a robust 2.2% growth rate. The Boise real estate market will see some benefit from these increases, plus other local market factors.

In the winter period the GDP posted fore-casted growth of 5.7%, which indicates goods and services production totals, according to Reuters. While the economy rebounded strongly in the second half of 2009 from the worst downturn since the 1930s, data so far suggests the rapid rate of acceleration slowed somewhat in the first quarter of 2010. Considering the housing slump and the low consumer confidence reports, businesses continued to reduce inventories to purchase needed software and equipment which all added up to a boost in fourth quarter numbers. All local indicators show that the rates of decrease were similar in the Boise real estate market.

Stripping out inventories, the economy expanded at an annual rate of 1.9%, rather than the 2.2% pace estimated last month, indicating growth was not being driven by demand. Inventory values were adjusted down from $33.5 billion initially, to $16.9 in the fourth quarter. Throughout the latter portion of the summer, inventory sales plummeted to $139 billion. The inventory changes alone were responsible for a 3.88% difference in GDP. Such a dramatic increase has not been seen since the final quarter of 1987. With so many suppliers eliminating excess inventory, builders in the Boise real estate market were helped out.

As a whole, the year 2009 featured the most dramatic decrease in GDP, at 2.4%, since the post World War II recovery of 1946. In the final three months of 2009, consumer spending increased at a 1.7% rate, rather than the 2% pace reported in January. Although offset soon afterward, the "cash for clunkers" program drove GDP, by stimulating consumption, up by a respectable 2.8%. The disappointing news came from the consumer spending sector which added only a 1.23% GDP gain, which is low considering it is normally about 70% of GDP. The Boise real estate market has shared in the impact of the national financial crisis.

Businesses continued to invest in equipment and necessary software at such a rate that the commercial real estate slump was not a cause of negative number in the Gross Domestic Product in the fourth quarter. Increases in business investment, from a projected 2.9% to a 6.5% actual pace helped out a lot. In the preceding three months, it had slid by about 5.9%. With an anticipated increase of 5.7% for the fourth quarter, the construction numbers were a bit of a disappointment when they came in at 5%. Posting an increase of just under 19% in the third quarter, there was quite a disparity between quarters. On the back of stronger exports and imports, which left a trade gap adding .3% to the GDP, the fourth quarter boasted better numbers than otherwise anticipated. With factors that effect Boise real estate and GDP, we are all eager to see a resolution to this crisis.

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