The so-called Great Recession, the longest and deepest since the Great Depression, is probably over. The Commerce Department’s advance estimate of third quarter gross domestic product came in at 3.5 percent, the strongest gain since the third quarter of 2007. We won’t know for sure which month the recession ended until the National Bureau of Economic Research, a non-profit group of economists, makes the call, and they usually wait for several months after the fact until the data are unequivocal. Besides GDP, the organization takes into account real income, employment, industrial production and wholesale-retail sales. Most economists think the recession ended in the summer or early autumn.
The strong performance is good news, but there are caveats. The “cash for clunkers” program added about one percentage point to the performance, and the $8,000 tax rebate for first-time homebuyers also played a role. It will be interesting to see if the economy can hold its momentum next year as the government support programs wind down.
For commercial real estate, this is certainly good news because it sets the stage for a return to job growth, although that may be several months away. Nevertheless, it is the clearest sign yet that the economy is headed in the right direction.
Robert Bach
SVP, Chief Economist
Grubb & Ellis
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