An Update: How a House Builds the GDP

Last year, we looked at the U.S. Census Bureau’s homebuilding visualization. Their graphic summed up the economic significance of a house through what we spend and who we employ.

Let’s take another look.

Housing Spending

Housing can jumpstart or retard economic growth. Below you can see the industries that participate. Ranging from asphalt shingles to mattresses, the manufactured goods that populate a house send many millions of dollars to the GDP:

All dollar and employment numbers (below) are from the graphic (above). Value of shipments is in thousands of dollars:

Asphalt                                                                        Truss Manufacturing

2019: $11,553,382       10,116          2019: $7,680,653         30,824

2020: $12,473,578      10,236         2020: $8,108,330         32,501

Concrete Block and Brick   Radio & TV Broadcasting & Wireless

2019: $4,813,962                  16,361       2019: $26,975,603                    63,868

2020: $5,121,226                  15,071       2020: $26,507,539                   62,899

Paint and Coating                    Upholstered Household Furniture

2019: $26,381,987    34,867        2019 $11,522,043     62,721

2020: $26,134,719    35,151         2020: $11,964,222    61,539

Residential Electric Lighting Fixtures   Mattress Manufacturing

2019: $2,110,576     5,776               2019: $7,371,350          20,645

2020: $1,920,532     5,081              2020: $7,029,938        19,259

Wood Window & Door Mfg. Major Household Appliances

2019: $13,644,225      52,865       2019: $20,908,626                43,847

2020: $14,110,107       56,730      2020: $21,433,390                 43,925

Wood Kitchen Cabinets & Countertops   Cut Stock, Resawing                                                                                           Lumber & Planing

2019: $14,182,880    90,314      2019: $5,560,584      20,481

2020: $14,616,426    87,857      2020: $6,467,986    21,368

Air-Conditioning & Warm Air Heating Equipment & Commercial & Industrial Refrigeration Equipment

2019: $34,321,878                96,281

2020: $34,538,704             106,726

Cement Manufacturing

2019: $8,727,094                 14,937

2020: $8,921,608                 14,806

Our Bottom Line: The GDP

We could say that housing spending on construction is all about the GDP.  While the GDP has four components–Consumption, Gross Investment, Government, Net Exports–housing takes us primarily to two of them. When the house was first built, its selling price would have been included as a part of the Gross Investment component. Yes, Gross Investment mainly reflects business spending. But here, the house is defined as an investment. Next, we need to ask who purchased the goods we listed. If you or I bought an appliance, then it is a Consumption Expenditure. When the contractor is the buyer, then it becomes a part of the price of the house. So, the concrete is added to the house itself. However, like some appliances, the furniture is a consumption expenditure.

The Congressional Research Service looked at our housing starts:

My sources and more: This U.S. Census Bureau site had the visuals and the numbers. Then, if you want to learn more about the GDP, the one source I suggest is GDP; A Brief But Affectionate History. From there, for current stats, do go to the U.S. BEA and to the Atlanta Fed’s GDPNow model. In addition, another handy possibility is the Congressional Research Service. (As an update, some of todays’s content repeats  sections of our original post.)