Real gross domestic product (GDP) expanded by just 0.7% (seasonally adjusted annual rate) during the fourth quarter of 2015, according to an analysis of Bureau of Economic Analysis data released by Associated Builders and Contractors (ABC). This paltry growth follows a 2% increase during the year's third quarter and a 3.9% increase during the second quarter. For the year, GDP expanded by 2.4%, matching the rate of growth seen in 2014.
Nonresidential fixed investment shrank by 1.8% in the fourth quarter, the first time the segment has contracted since the third quarter of 2012. For the year, nonresidential fixed investment expanded by 2.9% after growing by 6.2% in 2014 and 3% in 2013.
"The economy did not end the year well," ABC Chief Economist Anirban Basu said. "Today's GDP data adds weight to the argument that the U.S. is in a corporate profits recession, an industrial recession, and was experiencing a softening of investments. With the exception of the residential building sector, business capital outlays have declined as corporations deal with a combination of sagging exports, competitive imports, declining energy related investments, rising wage pressures and healthcare costs.
"Recent turbulence in financial markets suggest that capital availability may continue to soften," Basu said. "While residential construction is likely to continue to recover given the combination of low interest rates and accelerating household formation, nonresidential construction spending growth may begin to sputter a bit as those who deploy capital become more defensive. This is not to suggest that nonresidential construction spending is set to decline. Many contractors continue to report significant and growing backlog. However, the current situation suggests that the growth in backlog and ultimately in spending may not be quite as rapid as it was earlier in 2015."
Six key input prices rose or remained unchanged in October on a monthly basis, while one remained unchanged:
- Personal consumption expenditures expanded 2.2% in the fourth quarter after growing by 3% in the third quarter.
- Spending on goods grew 2.4% in the fourth quarter after expanding 5% in the third quarter and 5.5% in the second quarter.
- Real final sales of domestically produced output increased 1.2% for the fourth quarter after a 2.7% increase in the third quarter.
- Federal government spending increased 2.7% in the fourth quarter, the segment's largest increase since the third quarter of 2014.
- Nondefense spending increased 1.4% in the fourth quarter after expanding 2.8% in the previous quarter.
- National defense spending expanded by 3.6% in the fourth quarter after contracting by 1.4% during the third.
- State and local government spending contracted by 0.6% in the fourth quarter after increasing by 2.8% in the third quarter.
Related Stories
Giants 400 | Dec 2, 2020
2020 University Giants: Top architecture, engineering, and construction firms in the higher education sector
Gensler, AECOM, and Turner Construction top BD+C's rankings of the nation's largest university sector architecture, engineering, and construction firms, as reported in the 2020 Giants 400 Report.
Giants 400 | Dec 2, 2020
2020 Multifamily Sector Giants: Top architecture, engineering, and construction firms in the U.S. multifamily building sector
Clark Group, Humphreys & Partners Architects, and Kimley-Horn head BD+C's rankings of the nation's largest multifamily building sector architecture, engineering, and construction firms, as reported in the 2020 Giants 400 Report.
Giants 400 | Dec 2, 2020
2020 Airport Sector Giants: Top architecture, engineering, and construction firms in the U.S. airport facilities sector
AECOM, Hensel Phelps, and PGAL top BD+C's rankings of the nation's largest airport sector architecture, engineering, and construction firms, as reported in the 2020 Giants 400 Report.
Contractors | Dec 1, 2020
Abbott Construction to join the STO Building Group
Merger will expand both firms’ geographic reach and services.
Giants 400 | Nov 29, 2020
Top 85 Construction Management + Project Management Firms for 2020
Jacobs, CBRE, VCC, and JLL top the rankings of the nation's largest construction management (as agent) and program/project management firms for nonresidential and multifamily buildings work, as reported in Building Design+Construction's 2020 Giants 400 Report.
Giants 400 | Nov 29, 2020
Top 135 Contractors for 2020
Turner, Whiting-Turner, and STO Building Group head the rankings of the nation's largest general contractors, CM at risk firms, and design-builders for nonresidential buildings and multifamily buildings work, as reported in Building Design+Construction's 2020 Giants 400 Report.
Architects | Nov 24, 2020
AEC Leaders share lessons from past downturns
Positions of passivity and cost-cutting run counter to the key lessons from AEC leaders who successfully navigated their firms through past market downturns.
Smart Buildings | Nov 20, 2020
The Weekly show: SPIRE smart building rating system, and pickleball court design tips
The November 19 episode of BD+C's The Weekly is available for viewing on demand.
Government Buildings | Nov 13, 2020
Tax shortfalls nip government projects in the bud
Federal contracts are proceeding, but states and cities are delaying, deferring, and looking for private investment.
AEC Tech | Nov 12, 2020
The Weekly show: Nvidia's Omniverse, AI for construction scheduling, COVID-19 signage
BD+C editors speak with experts from ALICE Technologies, Build Group, Hastings Architecture, Nvidia, and Woods Bagot on the November 12 episode of "The Weekly." The episode is available for viewing on demand.
