It's More Than Housing
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With the apparent acceleration in economic growth this year, the search for excuses has also gotten underway. One way the more dour observers have tried to come to grips with faster GDP growth is to claim that housing activity is adding significantly to growth. Above is a table showing the annualized rate of change in real GDP and the contribution of housing to that rate change – both are rounded to the nearest tenth of a percent.

In the fourth quarter of 2012, housing accounted for roughly 100% of the increase in real GDP, but in Q1-2013, real GDP expanded at a 2.4% annualized growth rate and just 0.3% of that change was attributable to housing. Over the past eight quarters, real GDP has averaged 2.1% annualized growth and housing has attributed an average 0.25% per quarter. Without the growth in housing, real GDP would have expanded at an average annual rate of 1.88%. In other words, housing has added to growth, but it is far from the only thing that has been growing. It's the Plow Horse economy with, or without, housing.
Posted on Monday, June 17, 2013 @ 4:18 PM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.