Learning "GDP-Speak"

Follow the trends that influence value.

Real estate values rise in a strong economy. For example, when consumers have more money to spend, they often choose to make upgrades to their homes. If the economic bounty is shared by many in the neighborhood, the community improves. 

Gross Domestic Product (GDP), a common measure of our economy, continued growing at a healthy annual pace of 3.1% in the first quarter of 2019. What about now? A good source for the current direction of GDP is the Atlanta Federal Reserve's GDPNow website, which is updated several times each month, and presented with an explanation of the factors driving the economy. Today, GDPNow  projected a 1.5% second-quarter growth rate.

National trends are a good start for understanding economic growth, but local trends matter just as much. The regional Federal Reserve Banks just published their April/May "Beige Book" which contains a summary of each bank district. Michigan is part of the Federal Reserve Bank of Chicago's region, which saw a "slight" increase in Springtime economic activity, and expects "modest" growth over the year. Residential real estate showed strength in the lower price range but slower sales of higher-priced homes. High labor and material costs hamper commercial real estate activity. Overall, the real estate market is described as "plowing ahead".

After a few reviews of GDPNow and check-ups with the Beige Book, you'll be familiar with the economic drivers to follow.

Source: The chart above is from the GDPNow website, showing how its second quarter projection has fluctuated.