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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.

With Gross Domestic Product growth projected at a satisfying 5.7%, based on Commerce Department data from the 4th quarter, but actually came in at 5.9%, surpassing many expectations. This is the fastest pace the GDP has grown since the middle of the year in 2003. The economy expanded at a 2.2% annual rate in the third quarter. The Boise real estate market will see some benefit from these increases, plus other local market factors.

Major news agencies had indicated that the latter portion of 2009 posted a projected growth of 5.7%, including a total of all products and services inside United States borders. Not since the Great Depression of the 1930’s has the country seen this bad of a downturn, and it seemed like we were emerging in 2009 with the latter half of that year posting impressive numbers, but that has tailed off quite a bit in the initial months of 2010. A sharp brake in the pace at which businesses liquidated inventories combined with increased spending on equipment and software to boost growth in the fourth quarter, offsetting lackluster consumer spending and residential investment. This wan’t just a national trend either, as the Boise real estate market saw very similar changes in volume as well.

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 sales amounts were alarmingly reduced from $33.5 billion to around $16.9 billion in the final quarter. There was a signification reduction from July to September of $139 billion. The change in inventories alone added 3.88 percentage points to GDP in the last quarter. This was the biggest percentage contribution since the fourth quarter of 1987. As home materials companies liquidated inventory, Boise real estate reaped some benefit from that.

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.

With spending on commercial real estate heading down quickly, the fact that the growth happened at all was due mostly because of equipment purchases and investment in software necessary for business growth and improvement. Estimates for business investment came in at 2.9%, but rose dramatically to 6.5%, much higher than expected. Posting a decrease in the three month leading up to that, of 5.9%. With everyone watching the housing markets, projections of 5.7% were down graded to about 5% in the fourth quarter. In the third quarter it had posted a tremendous 18.9%. Both exports and imports grew much stronger than initially estimated in the fourth quarter, leaving a trade gap that contributed 0.3 percentage point to GDP growth, the data showed. As GDP indicates our national economic states, Boise real estate eagerly awaits is significant turn around.

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