Great News on the Economy in the Northwest Suburbs
It looks like we have finally turned the corner! Chicagoland real estate sales have increased 45% YTD and the Coldwell Banker Residential Brokerage office serving the Northwest Suburbs has increased sales 94% over last year!
We now expect the economy to grow by about 3.5% this year, a rate that’s still well below the typical post recession surge of 6.5% or so. But it’s a solid, sustainable pace. And it’s a lot better than last year’s 2.4% decline in GDP.
Consumers and businesses are buying again. A close look at the good
news of a 3.2% pace of economic growth in the first quarter reveals
the really good news: Final sales to domestic purchasers — which
don’t include inventory buildups or trade — rose at a 2.2% annualized
pace. That’s the second best showing in three years and up from the
1.4% rate in the fourth quarter of 2009, when GDP overall was growing by 5.6%. It signals a genuine pickup in U.S. consumers’ interest and ability to buy and indicates that businesses are no longer simply
restocking bare shelves, but investing in new equipment and moving
product out the door.
Total consumer spending, which accounts for more than two-thirds of
GDP, increased 3.6% in the first quarter, more than double the 1.6%
gain posted in the previous quarter. In 2009, household purchases
dropped 0.6%, the biggest decline since 1974.
A modestly improved housing market also will be a plus this year.
Although residential construction won’t take more than baby steps
until 2011, the sector won’t subtract from GDP this year the way it
did from 2006 to mid-2009. But spending on commercial construction
such as office buildings and shopping centers will remain a drag on
growth through this year.
Although exports will grow about 14% this year, adding to GDP, the
increase in imports will be even greater. So trade will be a net
negative for the U.S. economy. Little change is likely in the
contribution from government spending. Uncle Sam will spend a bit
more, but cash-squeezed state and local governments are cutting back.
Beneath the overall growth numbers, an unusual pattern is emerging, as smaller cities are seeing improvement before many of their bigger
cousins. Steve Cochrane, an economist who specializes in regional
economic analysis for MoodysEconomy.com, says this isn’t typical and
cites two reasons for it: First, the housing boom and bust largely
bypassed small to midsize cities, which shortened their recession and
enabled a faster recovery. Second, manufacturing is leading this
recovery and “the nation’s manufacturing base is largely in small to
midsize metros.”
About two dozen larger metro areas, including Denver, Houston, Dallas,
St. Louis, Pittsburgh, Boston and Buffalo, N.Y., have put the
recession behind them, according to MoodysEconomy.com. Nearly 200
smaller cities — those with populations of less than 1 million — are
firmly on the road to recovery. They are spread across all regions of
the country and include such diverse metro areas as Huntsville, Ala.;
Peoria, Ill.; Chattanooga, Tenn.; Billings, Mont.; Fort Collins,
Colo.; Ithaca, N.Y.; Raleigh, N.C.; Salem, Ore., and Sheboygan, Wis.
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