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
| Jun 23, 2014
Lilker Associates launches Lighting Group; David Cyr announced as Director
New division rounds out building systems services offerings for the Manhattan-based consulting firm.
| Jun 23, 2014
Berlin House of One will accommodate Muslims, Jews, and Christians
The building will rise on the ruins of a 13th-century Christian church that was damaged during WWII and eventually demolished.
| Jun 22, 2014
5 ways to improve your firm’s branding efforts
Establishing, conveying, and maintaining a powerful brand is a critical component of an AEC firm’s marketing strategy. Here are five strategies to make a greater impact with your firm’s branding efforts.
| Jun 20, 2014
CM firm Gafcon promotes Ron Takaki to VP/Project Operations
Executive holds more than 35 years experience in leading architectural, engineering, construction teams in large, complex project designs
| Jun 20, 2014
Sterling Bay pulled on board for Chicago Old Main Post Office project
Sterling Bay Cos. and Bill Davies' International Property Developers North America partner up for a $500 million restoration of Chicago's Old Main Post Office
| Jun 20, 2014
U.S. Energy Information Administration releases preliminary Commercial Buildings Energy Consumption Survey results
Federal survey project shows that commercial-building floorspace has grown 22% since 2003; energy-use data will be released in Spring 2015.
| Jun 20, 2014
Batson-Cook appoints Rygiel VP/Business Development for Tampa office
Rygiel will be responsible for cultivating and maintaining the contractor's business relationships in the state of Florida, concentrating on expanding the firm’s presence in the state’s private-development sector.
| Jun 19, 2014
First Look: 10 Design unveils new luxury apartments plan in Dubai
The Seventh Heaven complex features a stepped form that will offer stunning views of the Dubai skyline.
| Jun 19, 2014
First look: JDS Architects' roller-coaster-like design for Istanbul waterfront development
The development's wavy and groovy design promises unobstructed views of the Marmara Sea for every unit.
| Jun 19, 2014
Singapore's 'Tree House' vertical gardens break Guinness World Record
The high-rise development will have a 24,638-sf vertical garden, breaking a Guinness World Record.