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. As the recession eases Boise real estate will be helped out by the positive news.

It was estimated that Gross Domestic Product would increase at a clip of 5.7%, instead it grew at a rate of 5.9% according to the Commerce Department, based on fourth quarter financial numbers. The latest numbers reflect the most rapid pace since midyear of 2003. The fastest quarter was the third quarter which posted a robust 2.2% growth rate. Rewinding time to the 2003 numbers would definitely help the Boise real estate market.

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. With the recovery seemingly in full swing in the last few months of 2009, our nation seemed to be emerging from the most severe financial crisis since the Great Depression, but that growth has been stymied somewhat in the first quarter of 2010. Considering the housing slump and the low consumer confidence reports, businesses continued to reduce inventories to purchase needed software and equipment which all added up to a boost in fourth quarter numbers. This wan’t just a national trend either, as the Boise real estate market saw very similar changes in volume as well.

Growth was projected to be about 2.2%, but has been revised down to about 1.9%, which shows that growth has been due to reduced inventories and not so much a return of market demand. Inventory sales amounts were alarmingly reduced from $33.5 billion to around $16.9 billion in the final quarter. From July to September alone, they slid just over $139 billion. The change in inventories alone added 3.88 percentage points to GDP in the last quarter. Such a dramatic increase has not been seen since the final quarter of 1987. With so many suppliers eliminating excess inventory, builders in the Boise real estate market were helped out.

In fact, since 1946 there not been such a dramatic shrinkage in the economy as the 2.4% drop recently. Toward the end of 2009, consumer spending had to be reduced from the projected 2% to 1.7% in consumer spending. Although offset soon afterward, the “cash for clunkers” program drove GDP, by stimulating consumption, up by a respectable 2.8%. Previously reliable consumer spending levels, usually adding about 70% of GDP, was much lower than normal, adding only 1.23% to the nations GDP. The Boise real estate market has shared in the impact of the national financial crisis.

The fourth quarter GDP numbers increased, despite a slumping commercial real estate market, due to significant investment in software and required equipment by businesses. Estimates for business investment came in at 2.9%, but rose dramatically to 6.5%, much higher than expected. In just the three months prior, it had slumped by just under 6%. With everyone watching the housing markets, projections of 5.7% were down graded to about 5% in the fourth quarter. It had grown at an 18.9% pace in the third quarter. On the back of stronger exports and imports, which left a trade gap adding .3% to the GDP, the fourth quarter boasted better numbers than otherwise anticipated. With GDP factoring in to nearly every facet of business, Boise real estate is not independent.

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