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Drop in Property Deals Offsets GDP Gains
U.S. GDP increased at an annual rate of 2% in the fourth quarter, unchanged from Q3, according to the initial estimate by the Bureau of Economic Analysis (BEA). However, a 4.4% annual decline in nonresidential property acquisitions partly offset increases in other areas, including spending by both government and consumers.
“The pace of GDP growth in Q4 remained modest, and we look for further slowing in Q1-2020,” Jay Bryson, global economist with Wells Fargo Securities, was quoted by the Mortgage Bankers Association. “That said, the underlying fundamentals of the economy generally remain solid.”
Bryson noted that the labor market remains very strong, which continues to create real income. He added that the financial health of the household sector has improved markedly over the past decade.
“That said, a shock could potentially lead to some economic weakness in the United States, and we are watching the outbreak of the coronavirus closely to determine what effects, if any, it has for the U.S. economy,” he said.
Nareit’s Calvin Schnure also noted a 10.1% decline in annualized nonresidential construction spending during Q4. “About half the decline in structures was from oil and gas rigs, but hotels and other commercial buildings also slowed,” said Calvin Schnure, Nareit’s SVP, research & economic analysis.
However, Schnure added, “Consumer spending rose at a modest pace and is likely to support economic activity and CRE markets in 2020.”
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- ◦Economy
- ◦Sale/Acquisition
