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
Market Data | Sep 22, 2016
Architecture Billings Index slips, overall outlook remains positive
Business conditions are slumping in the Northeast.
Market Data | Sep 20, 2016
Backlog skyrockets for largest firms during second quarter, but falls to 8.5 months overall
While a handful of commercial construction segments continue to be associated with expanding volumes, for the most part, the average contractor is no longer getting busier, says ABC Chief Economist Anirban Basu.
Designers | Sep 13, 2016
5 trends propelling a new era of food halls
Food halls have not only become an economical solution for restauranteurs and chefs experiencing skyrocketing retail prices and rents in large cities, but they also tap into our increased interest in gourmet locally sourced food, writes Gensler's Toshi Kasai.
Building Team | Sep 6, 2016
Letting your resource take center stage: A guide to thoughtful site selection for interpretive centers
Thoughtful site selection is never about one factor, but rather a confluence of several components that ultimately present trade-offs for the owner.
Market Data | Sep 2, 2016
Nonresidential spending inches lower in July while June data is upwardly revised to eight-year record
Nonresidential construction spending has been suppressed over the last year or so with the primary factor being the lack of momentum in public spending.
Industry Research | Sep 1, 2016
CannonDesign releases infographic to better help universities obtain more R&D funding
CannonDesign releases infographic to better help universities obtain more R&D funding.
Industry Research | Aug 25, 2016
Building bonds: The role of 'trusted advisor' is earned not acquired
A trusted advisor acts as a guiding partner over the full course of a professional relationship.
Multifamily Housing | Aug 17, 2016
A new research platform launches for a data-deprived multifamily sector
The list of leading developers, owners, and property managers that are funding the NMHC Research Foundation speaks to the information gap it hopes to fill.
Hotel Facilities | Aug 17, 2016
Hotel construction continues to flourish in major cities
But concerns about overbuilding persist.
Market Data | Aug 16, 2016
Leading economists predict construction industry growth through 2017
The Chief Economists for ABC, AIA, and NAHB all see the construction industry continuing to expand over the next year and a half.
