Economists' Outlook

Housing stats and analysis from NAR's research experts.
  • The nation’s economy is humming along unspectacularly. GDP rose by 2.3 percent in the second quarter. Based on year-to-date activity and many other recent economic data, the year 2015 will again mark another subpar GDP growth. Slow growth is not the best of the world but is still leading to positive job creations.
  • GDP growth of 2.3 percent was a result of the following combination:
    • consumer spending expanding by 3 percent
    • business spending contracting by 1 percent
    • residential home spending rising by 6 percent
    • Exports rising by 5 percent while imports rising more slowly by 3 percent
    • Federal government spending falling 1 percent
    • State and local government spending rising 2 percent
  • Note the good number on residential home spending. It is bound to get even better as homebuilder break more ground and home sales further rise. The improvement in the real estate market is helping the economy stay afloat.
  • The long-term historical average GDP growth rate is 3 percent. Above that, things are really moving along nicely. Below that, it’s considered sluggish. A downright negative GDP growth figure marks a recession and job cuts. The U.S. GDP has not had above 3 percent growth for the past nine years and 2015 is forecasted to finish out the year with only 2 percent growth. In other words, it has been a decade of subpar economic performance in the U.S. compared to past performance.
  • Despite the subpar growth, jobs are being created. In the past 12-months, more than 3 million net new jobs have been created. Part-time employment remains elevated, however, and the wage growth is only 2 percent. Due to job creation, home sales will rise by 5 to 7 percent nationwide this year. Sales, however, will be 25 percent below the prior peak set a decade ago.
  • As an aside, consider the following: to be well off or to be better off? Sounds the same but there is a difference. Well off is being rich and having many things. Better off means moving up the economic ladder with this year being better than last year. GDP is at an all-time high today but are people necessarily happier? Some research implies it is not the level but progress that is more important. That is why automakers, for example, produce so many different models to fit every purse which helps consumers mark their personal economic progress. Trade-up home buying in a better neighborhood also provides that joy of progress. Sadly though, most middle-class Americans have not been progressing in recent years because of sluggish GDP growth.

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