International Door & Operator Industry

SEP-OCT 2017

Garage door industry magazine for garage door dealers, garage door manufacturers, garage door distributors, garage door installers, loading docks, garage door operators and openers, gates, and tools for the door industry.

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V O L U M E 5 0 I S S U E 5 O C T O B E R 2 0 1 7 23 Gross Private Domestic Investment Correlation with Garage Door Demand Developing useful projections (forecasts) of demand for any product or commodity requires identification of the forces that influence that demand. In short, what causes demand to increase or abate Demand for any product is driven by a combination of factors, and the relative importance of each changes over time. Such factors are referred to as "independent variables", and demand for any product is subject to multiple variables. For construction industry products, economic change has a significant impact because construction requires investable funds which accrue or deplete as the health of an economy changes. Various measurements of economic change are therefore useful variables for predicting changes in the demand for garage doors. As noted above, demand is a function of multiple variables, but it takes far more space and time than we have here to examine such an extensive array. Thus, we are going to focus on two measurements of a single variable: Gross Private Domestic Investment in Structures – residential and nonresidential. Moreover, we are going to consider only demand for sectional overhead- type garage doors. In future articles in this space we will look at both other economic variables and other garage door products. MANAGEMENT Continued on page 24 by John Zoller & David Bowen, Zoller Consulting, Inc. GPDI in Context Gross Private Domestic Investment (GPDI) is one of the four primary components of Gross Domestic Product (GDP), the other three being Personal Consumption Expenditures, Net Exports of goods and services, and Government Consumption Expenditures and Gross Investment. Table A provides a quick view of the relationship of the four components and some of the secondary measurements, two of which we will consider here. A quick review of macro-economic accounting helps interpret Table A and explain why the two GPDI factors influence garage door demand. GDP is the broadest measure of U.S. economic activity and is best defined as the market value of goods and services produced by labor and property in the United States. GDP may also be viewed as the sum of value added by industry across all U.S. industries. Personal Consumption Expenditures is the final-demand component that measures 23 V O L U M E 5 0 I S S U E 5 O C T O B E R 2 0 1 7 $ Gross Domestic Product Composition at 2nd Calendar Quarter 2017 Billions of Current $ Billions of Chained 2009 $ seasonally adjusted annual rates Gross domestic product 19,226.7 17,010.7 Personal consumption expenditures 13,292.6 11,839.7 Durable Goods 1,452.8 1,672.7 Non-Durable Goods 2,788.2 2,564.3 Services 9,051.6 7,657.7 Gross private domestic investment 3,161.8 2,911.5 Non-Residential 2,424.5 2,292.4 Structures 560.2 473.6 Equipment 1,080.7 1,080.4 Intellectual property 783.6 741.2 Residential Structures 739.9 594.9 Net exports of goods and services (567.3) (614.9) Exports 2,318.8 2,183.9 Imports 2,886.1 2,798.8 Government consumption expendi - tures and gross investment 3,339.6 2,901.6 Federal (National Defense) 742.1 667.0 Federal (other) 514.5 446.9 State and local 2,083.1 1,785.1 Table A Gross Private Domestic Investment Correlation with Garage Door Demand

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