Economist's Commentary: March 27, 2008

Quick Take on Today's Key Economic Data

By Lawrence Yun, Chief Economist

NAR Chief Economist Lawrence Yun Today's Quick Take focuses on GDP growth and unemployment insurance claims.

0.6 percent expansion in the 4th quarter of 2007.
Essentially unrevised read from what was said last month. It is the third and final reading of what happened at the end of last year. This is a rear mirror view reading.
The data contains no information about what is happening in March or for the first quarter of 2008.
The housing sector contraction was the biggest reason for the slow economy.
A 3 percent growth rate is considered normal and healthy. Therefore, the economy expanded at a very slow rate indeed.
However, we are not in a formal contraction. Two consecutive quarters of GDP contraction are needed in order to be classified (in most cases) as an economic recession.
Based upon all the readings on monthly data on durable goods orders, employment, international trade, business inventory changes … expect about near zero growth expansion in the first quarter of 2008. The fresh data will be released about this time next month.
I think the second quarter will show an improvement due to rising exports and less of a decline in residential construction activity.
Therefore, we will formally avoid recession. Most people, however, believe that we are in a recession; 75 percent of Americans indicated as such according to one survey.

First-time jobless claims at unemployment offices fell to 366,000 in the latest week.
The figure is higher than normal, however. It averaged 322,000 per week in 2007.
It reached a 400,000 weekly average in the last recession in 2001.
The continuing (not first-time) jobless claims figure was little changed at 2.84 million. It averaged 2.5 million in 2007 and reached 3.5 million in the last recession.
The data further confirms a soft economy – though not as bad as during the last recession.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

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