Research Brief: Gross Domestic Product
Economy Grows at the Fastest Pace in Postwar Era in Third Quarter
October 2020 | Marcus & Millichap
U.S. records strongest quarterly gain on record. Reopening local economies pushed GDP growth to 33.1 percent in the summer quarter. Although the gain was on the high end of expectations, the overall economy remains 3.5 percent below the level at the end of last year. Following strict shutdowns in April and May, most states began to relax restrictions on nonessential businesses to some degree. At the same time, CARES Act stimulus started reaching households as delayed unemployment payments, the Paycheck Protection Plan, and other support was injected into the economy. Much of the third quarter growth likely occurred in the first two months of the period before government aid dissipated.
Commercial real estate has uneven recovery. Both property type and geographical location play a critical role in the health of the individual assets. Moving forward, a potential slowdown in construction should assist in a decrease in vacancy when demand improves. In the third quarter, expenditures on nonresidential structures declined by 14.6 percent, building on a 33.6 percent fall during the second quarter. Dense areas may underperform until workers return to offices, while suburban properties across most asset types are comparatively overperforming. Experience-based retailers and hotels face a steeper path forward and Sunbelt states should also show a little strength due to more relaxed restrictions.
