Both real gross domestic product (GDP) and nonresidential fixed investment expanded during the third quarter, according to an analysis by Associated Builders and Contractors (ABC) of a release from the Bureau of Economic Analysis. GDP expanded 1.5% (seasonally adjusted annual rate) during the third quarter while nonresidential fixed investment expanded by 2.1% during that period, both building on positive results from the previous quarter.
The bureau estimated that GDP expanded 3.9% during the year's second quarter, while nonresidential fixed investment was revised upward to a 4.1% increase from an initial estimate of a 0.6% decrease. This marks the second consecutive release in which the previous quarter's nonresidential fixed investment figure was amended from negative to positive. Investment in nonresidential structures fell by 4% after growing by 6.2% in the second quarter.
"The U.S. economy is not quite as bad as the headline GDP number suggests," said ABC Chief Economist Anirban Basu in a statement. "Private final demand, an indicator that represents sales to nongovernmental domestic purchasers, expanded by 3.2% in the third quarter. Many economists consider this the most telling and persistent aspect of GDP, suggesting that the economy is healthier than some might suspect.
"The current quarter was heavily impacted by a foreseeable inventory adjustment, a stronger dollar and a weakening global economy," Basu said. "The fact that the recovery remains in place is reflected in fixed investment data, including the categories that relate most directly to nonresidential construction. While it is true that investment in structures slipped 4%, this largely appears to be a statistical give-back from the second quarter's better than 6% performance. Other data indicates ongoing momentum in nonresidential construction, which should be more apparent during ensuing GDP releases.
"The recovery will continue to be led by consumers," Basu said. "Interest rates will also feature prominently in terms of determining the extent to which the recovery will be sustained in 2016 and beyond. For now, ultra-low interest rates are inducing people to invest in order to generate financial yields. This has been a bonus for nonresidential construction, but potentially may be triggering over investment in certain construction segments."
Performance of key segments during the third quarter:
- Personal consumption expenditures added 2.19% to GDP after contributing 2.42% in the second quarter.
- Spending on goods grew 4.5% from the second quarter.
- Real final sales of domestically produced output increased 2.9% for the third quarter after a 3.7% increase in the second quarter.
- Federal government spending increased 0.2% in the third quarter after remaining unchanged in the second quarter.
- Nondefense spending increased 2.8% after decreasing by 0.5% in the previous quarter.
- National defense spending fell 1.4% after inching 0.3% higher in the second quarter.
- National defense spending fell 1.5% after growing 1% in the first quarter.
- State and local government spending expanded 2.6% during the third quarter after an increase of 4.3% in the second.
To view the previous GDP report, click here.
Related Stories
Digital Twin | May 24, 2021
Digital twin’s value propositions for the built environment, explained
Ernst & Young’s white paper makes its cases for the technology’s myriad benefits.
Contractors | May 20, 2021
Balfour Beatty’s outreach to veterans pays dividends in leadership and growth
Contracts for work it’s done for the San Diego Unified School District have extended to several disabled vet-owned businesses.
Senior Living Design | May 19, 2021
Senior living design: Post-COVID trends and innovations
Two senior living design experts discuss the latest trends and innovations in the senior living building sector.
Multifamily Housing | May 18, 2021
Multifamily housing sector sees near record proposal activity in early 2021
The multifamily sector led all housing submarkets, and was third among all 58 submarkets tracked by PSMJ in the first quarter of 2021.
Wood | May 14, 2021
What's next for mass timber design?
An architect who has worked on some of the nation's largest and most significant mass timber construction projects shares his thoughts on the latest design trends and innovations in mass timber.
Healthcare Facilities | Apr 30, 2021
Registration and waiting: Weak points and an enduring strength
Changing how patients register and wait for appointments will enhance the healthcare industry’s ability to respond to crises.
University Buildings | Apr 29, 2021
The Weekly Show, April 29, 2021: COVID-19's impact on campus planning, and bird management strategies
This week on The Weekly show, BD+C Senior Editor John Caulfield interviews a duo of industry experts on 1) how campus planning has changed during the pandemic and 2) managing bird infestations on construction sites and completed buildings.
Multifamily Housing | Apr 22, 2021
The Weekly Show, Apr 22, 2021: COVID-19's impact on multifamily amenities
This week on The Weekly show, BD+C's Robert Cassidy speaks with three multifamily design experts about the impact of COVID-19 on apartment and condo amenities, based on the 2021 Multifamily Amenities Survey.