The sequential 2.9% decline in U.S. gross domestic product (GDP) in the first quarter of 2014 was lower than expected and the largest drop since the first quarter of 2009. There was at least one bit of good news, though, and that came from spending on items related to housing.
According to research firm CoreLogic, spending on housing not only increased, the increase in the third revision issued last week by the U.S. Bureau of Economic Analysis showed the increase rising from a prior estimate of 3.3% to 3.6%. CoreLogic includes three spending categories in its total: residential investment (the construction of new single-family and multifamily houses), spending on housing services (rent, owner’s equivalent rent and utilities) and spending on furnishings and durable goods.
Spending on housing was flat with the fourth quarter of 2013, but lower than the high of 20.6% of GDP in the third quarter of 2005. Rent and utilities accounted for 12.6% of housing-related GDP, residential investment accounted for 3.1%, and furnishings and durable goods accounted for 2% of spending. CoreLogic said that the fluctuations in housing-related GDP are due primarily to changes in residential investment, which made up 6.2% of GDP in 2005, twice the total of the 2014 first quarter.