Just Out-GDP News Shows Economy Growing

By Robert Hand
March 29, 2012

Real gross domestic product (GDP) -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.0 percent in the fourth quarter of 2011 (that is, from the third quarter to the fourth quarter), according to the "third" estimate released today by the Bureau of Economic Analysis.  In the third quarter, real GDP increased 1.8 percent. The chart below of GDP shows the rapid falloff we experienced in 2008 and 2009 where GDP fell by 8.9%, then we  experienced the strongest quarter comeback in the 1st quarter of 2010 with 3.9% growth. This national economic growth is one reason New Orleans commercial real estate picked up in 2011.

 Chart of Gross Domestic Product Percent Change By Quarter

4th quarter 2011r means the number was revised. The news out today is for the "third" estimate as seen in the table below. The "third" estimate of the fourth-quarter percent change in real GDP is the same as the "second" estimate issued last month, primarily reflecting a downward revision to exports that was offset by an upward revision to nonresidential fixed investment.

 Table of GDP 4th Quarter 2011 Percent Revisions

Advance Estimate

Second Estimate

Third Estimate

Real GDP




With good growth in the economy, we should have expanding corporate profits which fuel expansion and new commercial real estate development. It is a domino effect of new industrial facilities needed to meet new demand and new offices needed  to house new employees at new locations. As shown in the chart below, coming out of the recession of 2008, corporate profits grew 32% in 2010 over 2009; however, profits grew more slowly in 2011 at 7.9%.

Source: Bureau of Economic Analysis, release dated March 27, 2011. Figures in billions.


Corporate profits, when measured by quarter in 2011, illustrate a slowing in growth in the 4th quarter from 1.7% to 0.90%, as seen in the table below. This slowdown might put commercial real estate projects on hold until the 1st quarter of 2012 shows us a stronger economy.

Table of Corporate Profit Percent Growth By Quarter, 2011

2011.1 2011.2 2011.3 2011.4
Corporate profit growth 1.00% 3.30% 1.70% 0.90%
(With   inventory  valuation and capital   consumption adjustments)

Louisiana Commercial Realty

Commercial Real Estate Experts
Robert Hand, MBA, CCIM, SIOR
Licensed in Louisiana & Mississippi
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram