Housing Market a Drag on GDP Growth

By:
Kara Johnson | October 29, 2010

The U.S. economy grew at a modest 2.0 percent annual rate in the third quarter of the year, but was restrained by weakness in home construction, the Commerce Department is reporting. 

The increase, up from a 1.7 percent gain in gross domestic product(GDP) in the second quarter, was generally in line with what economists had expected. The new figures, released today, are considered a sign that the economy is slowly recovering, although not at a rate sufficient to make a significant dent in unemployment.
 
The gain was largely driven by a 2.6 percent increase in consumer spending, which was the biggest increase since the fourth quarter of 2006. Other positive contributions to the economy came from businesses investing in inventories, equipment and software; federal spending and rising exports.
 
The biggest drag on the economy came from the housing market, with spending on private residential construction down 29.1 percent, following a 25.7 percent gain in the second quarter of the year.
 
Today’s third-quarter figures are considered preliminary; revised figures based on additional data are due to be released Nov. 23.

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