Impact of Real GDP in Home Building.

The best measure of the economy's health is the real growth rate (growth in excess of inflation) of the Gross Domestic Product (GDP). A recession is considered to be a period when GDP growth is negative for two consecutive quarters. The country's Real Gross Domestic Product is the sum of the output of goods and services that are located in the United States. GDP is a measure of total spending in three categories (consumer spending, …

…economy is growing faster than the Fed deems to be sustainable, the Federal Reserve is inclined to raise interest rates to slow the rate of growth and prevent inflation from accelerating. A quickly growing economy can lead to rapidly rising wages and salaries, which increases the cost of goods and, therefore, leads to inflation. REFERENCES: BEA, U.S. Department of Commerce, National Economics Accounts "News Release: Gross Domestic Product, Third Quarter 2004" October 29, 2004, Volume BEA 04-48.