Private Residential Spending Hit 50 Year High as Pct. of GDP Last Year... And Now the Record Decline
A
very interesting observation on the housing sector from CrossWallStreet
blog, with a graph showing private residential investment as a percentage
of GDP over the last 50 years. Comparing
with GDP over a period of time is a very good gauge of most economic
indicators.
This chart shows that private residential investment has been on a steady growth path since the early '90s for almost 15 years and reached a 50 year record of 6.3% of GDP recently, before the sharp decline started.
Private residential construction spending fell by 1.6% in November 2006 to $589.3 billion annual rate, after dropping 1.7% in October. Spending on private residential construction projects has fallen 8 months in a row, the longest drop on record. PRI has now declined 11.1% in the 12 months since November 2005.
Source:
CrossingWallStreet.com
Another interesting insight from this chart is, most of the downtrends are pretty severe, wiping away all the gains from the preceding boom cycle. The average of PRI as a % GDP over the last 50 years is about 4.7%.
