The U.S. economy expanded at an annualized rate of 2.1% in the fourth quarter of 2019, despite investment in structures declining at an annualized rate of 10.1%, according to an Associated Builders and Contractors analysis of data released today by the U.S. Bureau of Economic Analysis. Investment in structures contracted for three consecutive quarters and declined 4.4% during 2019.
In 2019, real GDP expanded by 2.3%, which was slower than the 2.9% rate of growth observed in 2018. Investment in structures contracted 4.4% in 2019 after expanding by 4.1% in 2018.
“Last year will be remembered as decent but unspectacular for the U.S. economy,” said ABC Chief Economist Anirban Basu. “Strong consumer spending, historically low unemployment, surging asset prices and healthy backlog levels, according to ABC’s Construction Backlog Indicator, were offset by soft business investment, flattening levels of nonresidential construction and soaring national debt. In addition, key segments of the economy, including manufacturing and agriculture, were particularly weak.
“But 2019 tells us little about 2020 dynamics,” said Basu. “Coming into last year, many expected interest rates and the general cost of capital to rise. Instead, interest rates dipped, creating an improved environment for purchasers of construction services. Last year was also shrouded by fears of worsening trade wars, but with the ratification of the USMCA and the attainment of a first phase trade deal with China, the level of uncertainty has abated. Through the first month of 2020, this has translated into rising stock prices, which should induce greater business investment.
“This year’s presidential election may cause some purchasers of construction services to adopt a wait-and-see attitude,” said Basu. “Contractors are currently upbeat about their prospects over the next two quarters, according to ABC’s Construction Confidence Index. However, given contracting levels of investment in structures, it is unclear if that will persist through the end of 2020.”
Related Stories
Codes and Standards | Oct 26, 2022
‘Landmark study’ offers key recommendations for design-build delivery
The ACEC Research Institute and the University of Colorado Boulder released what the White House called a “landmark study” on the design-build delivery method.
Building Team | Oct 26, 2022
The U.S. hotel construction pipeline shows positive growth year-over-year at Q3 2022 close
According to the third quarter Construction Pipeline Trend Report for the United States from Lodging Econometrics (LE), the U.S. construction pipeline stands at 5,317 projects/629,489 rooms, up 10% by projects and 6% rooms Year-Over-Year (YOY).
Designers | Oct 19, 2022
Architecture Billings Index moderates but remains healthy
For the twentieth consecutive month architecture firms reported increasing demand for design services in September, according to a new report today from The American Institute of Architects (AIA).
Market Data | Oct 17, 2022
Calling all AEC professionals! BD+C editors need your expertise for our 2023 market forecast survey
The BD+C editorial team needs your help with an important research project. We are conducting research to understand the current state of the U.S. design and construction industry.
Market Data | Oct 14, 2022
ABC’s Construction Backlog Indicator Jumps in September; Contractor Confidence Remains Steady
Associated Builders and Contractors reports today that its Construction Backlog Indicator increased to 9.0 months in September, according to an ABC member survey conducted Sept. 20 to Oct. 5.
Market Data | Oct 12, 2022
ABC: Construction Input Prices Inched Down in September; Up 41% Since February 2020
Construction input prices dipped 0.1% in September compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data released today.
Laboratories | Oct 5, 2022
Bigger is better for a maturing life sciences sector
CRB's latest report predicts more diversification and vertical integration in research and production.
Market Data | Aug 25, 2022
‘Disruptions’ will moderate construction spending through next year
JLL’s latest outlook predicts continued pricing volatility due to shortages in materials and labor
Market Data | Aug 2, 2022
Nonresidential construction spending falls 0.5% in June, says ABC
National nonresidential construction spending was down by 0.5% in June, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau.
Market Data | Jul 28, 2022
The latest Beck Group report sees earlier project collaboration as one way out of the inflation/supply chain malaise
In the first six months of 2022, quarter-to-quarter inflation for construction materials showed signs of easing, but only slightly.
