The U.S. economy expanded at an annualized 3.2% rate during the first quarter of 2019, according to an Associated Builders and Contractors assessment of data released today by the U.S. Bureau of Economic Analysis. The pace of growth exceeded expectations, as many economists predicted growth would be closer to 2.5%.
Growth was fueled by myriad factors, including personal consumption expenditures, private inventory investment, surprisingly rapid growth in exports, state and local government spending and intellectual property. However, residential investment declined.
“Today’s headline number was a blockbuster,” said ABC Chief Economist Anirban Basu. “Despite a slowing global economy, growing labor shortages, soft residential construction and generally lackluster first quarter growth, the overall U.S. economy got off to a fast start in 2019. What’s more, that rapid growth continues to be associated with only moderate inflation.
“That said, nonresidential building investment declined for a third consecutive quarter during the first quarter of 2019, though the pace of decline was not as noteworthy as it was during the third and fourth quarters of last year,” said Basu. “There are many conceivable factors, including weather-induced interruptions in construction activity, concern about overbuilding in office, lodging and other commercial segments, as well as the inability of contractors to fully address demand for construction services due to a dearth of available skilled workers.
“With the year off to a strong start, there appears to be enough momentum to carry the U.S. economy through 2019,” said Basu. “Any fears of a near-term recession have likely been quashed. However, the surprising strength of the U.S. economy may result in a reassessment of policymaking by the Federal Reserve, even though recent statements made by Fed officials have suggested that there wouldn’t be a further rate increase in 2019. If the Federal Reserve decides to pivot and raise rates again later this year, that would represent a negative in terms of demand for construction services due to a corresponding increase in the cost of capital to finance projects.”
Related Stories
Market Data | Sep 24, 2020
6 must reads for the AEC industry today: September 24, 2020
SOM's new waterfront neighborhood and a portable restroom designed for mobility.
Market Data | Sep 23, 2020
Architectural billings in August still show little sign of improvement
The pace of decline during August remained at about the same level as in July and June.
Market Data | Sep 23, 2020
7 must reads for the AEC industry today: September 23, 2020
The new Theodore Presidential Library and the AIA/HUD's Secretary's Awards honor affordable, accessible housing.
Market Data | Sep 22, 2020
6 must reads for the AEC industry today: September 22, 2020
Construction employment declined in 39 states and no ease of lumber prices in sight.
Market Data | Sep 21, 2020
Washington is the US state with the most value of construction projects underway, says GlobalData
Of the top 10 largest projects in the Washington state, nine were in the execution stage as of August 2020.
Market Data | Sep 21, 2020
Construction employment declined in 39 states between August 2019 and 2020
31 states and DC added jobs between July and August.
Market Data | Sep 21, 2020
6 must reads for the AEC industry today: September 21, 2020
Four projects receive 202 AIA/ALA Library Building Award and Port San Antonio's new Innovation Center.
Market Data | Sep 18, 2020
Follow up survey of U.S. code officials demonstrates importance of continued investment in virtual capabilities
Existing needs highlight why supporting building and fire prevention departments at the federal, state, and local levels is critical.
Market Data | Sep 18, 2020
6 must reads for the AEC industry today: September 18, 2020
Sagrada Familia completion date pushed back and energy code appeals could hamper efficiency progress.
Market Data | Sep 17, 2020
6 must reads for the AEC industry today: September 17, 2020
Foster + Partners-designed hospital begins construction in Cairo and heat pumps are the future for hot water.