GDP Growth | Bedford Hills NY Real Estate

- April 28, 2012

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses GDP growth.

The economy hit a soft patch in the latest report with GDP growing by only 2.2 percent on an annualized basis. This all-encompassing measure on everyone’s income all combined needs to grow by at least 3 percent to assure consistent solid growth in jobs.

Even though expansion momentum slowed, the economy is in no danger of falling into a recession with people losing jobs on net because the positives clearly outweigh the negatives at the moment. Consumers have slowly opened their wallets, and consumer spending rose 2.9 percent. Companies held back spending in the first quarter, but this is likely to be temporary given that corporate cash reserves are sky-high. And, more importantly, the recovering housing market will add meaningfully to GDP growth this year for the first time in 6 years.

On the negative side, military spending cuts led to an overall lower decline in federal government spending. Spending cuts at state and local governments also forced GDP down.

GDP growth rates in the upcoming quarters are expected to be about the same: sluggish to moderate, and neither robust nor contracting. At this speed, the unemployment rate will likely go down to around 7.8% by the end of the year.