Despite residential construction being on the mend, its contribution to GDP is tiny. During Q1 2013, the value of new single family construction was just $157 billion, or 0.98% of GDP, while residential improvements contributed $161 billion or 1%. This was the 18th straight quarter where spending on improvements exceeded new single family construction! All residential spending totaled $424.5 billion or 2.7% of GDP, about 60% of its long-run level.
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Finally!
Next week the European Central Bank will finally lower its key interest by a quarter-point to 0.5%, as the euro-region recession continues. Most importantly, Germany, Europe’s largest economy, may now officially be in recession and business confidence is slumping. Meanwhile, across Europe, purchasing managers are indicating continued contraction and exports to China are slowing. While the rate reduction will not really change things, it’ll provide a psychological lift.