The U.S. economy contracted at a 1.4% annualized rate during the first quarter of 2022. Investment in nonresidential structures declined at an annual rate of 0.9% during the quarter and has contracted nine of the past 10 quarters, according to an Associated Builders and Contractors analysis of data released today by the U.S. Bureau of Economic Analysis.
“The economy’s woeful performance during 2022’s first quarter complicates matters,” said ABC Chief Economist Anirban Basu. “Conventional wisdom says the economy has enough momentum to contend with the tighter monetary policy the Federal Reserve is pursuing to countervail inflation. Today’s data indicate that the economy is weaker than thought, which means the Federal Reserve will have a very difficult time curbing inflation without driving the economy into recession in late 2022 or 2023.
“That said, the economy should manage to generate some positive momentum during the next two to three quarters,” said Basu. “Consumer demand for goods and services remains strong. The omicron variant affected the economy during the first quarter and that does not appear to be the case during the second. Global supply chains have been adjusting to the dislocations caused by the Russian-Ukraine war. Many state and local governments are flush with cash and continue to plan for a period of elevated infrastructure outlays.
“There is one other bit of good news,” said Basu. “The weakness exhibited by the economy during the first quarter may persuade monetary policymakers to raise interest rates less aggressively. This is a matter of significance for nonresidential contractors, who have become less confident in recent months, according to ABC’s Construction Confidence Indicator. Investment in structures continues to decline in America, in part due to weakness in office, lodging and shopping mall segments. Presumably, additional rapid increases in borrowing costs would further dampen new construction in these categories. It may be that the Federal Reserve will raise interest rates more gradually than they would have knowing that the U.S. economy is already rather fragile.”
Related Stories
Retail Centers | Apr 4, 2024
Retail design trends: Consumers are looking for wellness in where they shop
Consumers are making lifestyle choices with wellness in mind, which ignites in them a feeling of purpose and a sense of motivation. That’s the conclusion that the architecture and design firm MG2 draws from a survey of 1,182 U.S. adult consumers the firm conducted last December about retail design and what consumers want in healthier shopping experiences.
Market Data | Apr 1, 2024
Nonresidential construction spending dips 1.0% in February, reaches $1.179 trillion
National nonresidential construction spending declined 1.0% in February, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.179 trillion.
Market Data | Mar 26, 2024
Architecture firm billings see modest easing in February
Architecture firm billings continued to decline in February, with an AIA/Deltek Architecture Billings Index (ABI) score of 49.5 for the month. However, February’s score marks the most modest easing in billings since July 2023 and suggests that the recent slowdown may be receding.
K-12 Schools | Mar 18, 2024
New study shows connections between K-12 school modernizations, improved test scores, graduation rates
Conducted by Drexel University in conjunction with Perkins Eastman, the research study reveals K-12 school modernizations significantly impact key educational indicators, including test scores, graduation rates, and enrollment over time.
MFPRO+ News | Mar 16, 2024
Multifamily rents stable heading into spring 2024
National asking multifamily rents posted their first increase in over seven months in February. The average U.S. asking rent rose $1 to $1,713 in February 2024, up 0.6% year-over-year.
Market Data | Mar 14, 2024
Download BD+C's March 2024 Market Intelligence Report
U.S. construction spending on buildings-related work rose 1.4% in January, but project teams continue to face headwinds related to inflation, interest rates, and supply chain issues, according to Building Design+Construction's March 2024 Market Intelligence Report (free PDF download).
Contractors | Mar 12, 2024
The average U.S. contractor has 8.1 months worth of construction work in the pipeline, as of February 2024
Associated Builders and Contractors reported that its Construction Backlog Indicator declined to 8.1 months in February, according to an ABC member survey conducted Feb. 20 to March 5. The reading is down 1.1 months from February 2023.
Market Data | Mar 6, 2024
Nonresidential construction spending slips 0.4% in January
National nonresidential construction spending decreased 0.4% in January, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.190 trillion.
Multifamily Housing | Mar 4, 2024
Single-family rentals continue to grow in BTR communities
Single-family rentals are continuing to grow in built-to-rent communities. Both rent and occupancy growth have been strong in recent months while remaining a financially viable option for renters.
MFPRO+ News | Mar 2, 2024
Job gains boost Yardi Matrix National Rent Forecast for 2024
Multifamily asking rents broke the five-month streak of sequential average declines in January, rising 0.07 percent, shows a new special report from Yardi Matrix.
