“If you’re offered a seat on a rocket ship, don’t ask what seat! Just get on.”
-Sheryl Sandberg, Facebook chief operating officer
You wouldn’t know it from media commentary and market swings, but last week included plenty of economic data releases.
Granted, the release of fourth-quarter gross domestic product figures surely isn’t as interesting as Redditors taking on hedge funds via a struggling video game and consumer electronics retailer. For the most part, we will continue to stay in our economic and real estate data lane, but for readers who stick around to the end, there might just be a GameStop chart in it for you.
For now, let’s refresh some graphs we featured after the last year’s third-quarter GDP release, showing where the recovery is and isn’t concentrated. The recovery slowed to close the year, as seen in the flattening out of the dotted total GDP line below. But the divergences under the surface grew.
Investments in residential properties grew yet again, as the housing market remained on fire amid low rates and largely recovered incomes from higher-income households. Relatedly, purchases of durable goods and nonresidential equipment continued to show major growth above pre-pandemic levels. These two series were mostly boosted by auto and computer purchases, again durable purchases for those likely able to work from home through the pandemic.
Going the wrong direction, meanwhile, are household service purchases as well as nonresidential structure investment. The former flattened out as social distancing efforts redoubled with a surge in COVID-19 cases to close the year. The latter — essentially new commercial construction — is likely familiar to anyone reading this. New starts of commercial property continue to decline, apart from the industrial sector.
The GDP segments outperforming, notably the surge in new home, auto and computer purchases, are unlikely to be sustained at these levels in coming years. In fact, new home sales have already declined 14% from July’s peak, according to December data released last week, and monthly personal consumption has declined nearly 1% from October to December alone. But the two segments consistently underperforming, consumer services and commercial construction, are more interesting case studies.