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
University Buildings | Dec 5, 2023
The University of Cincinnati builds its largest classroom building to serve its largest college
The University of Cincinnati’s recently completed Clifton Court Hall unifies the school’s social science programs into a multidisciplinary research and education facility. The 185,400-sf structure is the university’s largest classroom building, serving its largest college, the College of Arts and Sciences.
MFPRO+ News | Dec 5, 2023
DOE's Zero Energy Ready Home Multifamily Version 2 released
The U.S. Department of Energy has released Zero Energy Ready Home Multifamily Version 2. The latest version of the certification program increases energy efficiency and performance levels, adds electric readiness, and makes compliance pathways and the certification process more consistent with the ENERGY STAR Multifamily New Construction (ESMFNC) program.
Giants 400 | Nov 28, 2023
Top 55 Laboratory Construction Firms for 2023
Whiting-Turner, DPR Construction, STO Building Group, Skanska, and Hensel Phelps top BD+C's ranking of the nation's largest laboratory general contractors and construction management (CM) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
Contractors | Nov 28, 2023
Swinerton’s special projects units allow the national GC to operate like a local boutique firm
Swinerton’s Carolinas Division has been particularly successful in attracting jobs that require a nimble touch.
Engineers | Nov 27, 2023
Kimley-Horn eliminates the guesswork of electric vehicle charger site selection
Private businesses and governments can now choose their new electric vehicle (EV) charger locations with data-driven precision. Kimley-Horn, the national engineering, planning, and design consulting firm, today launched TREDLite EV, a cloud-based tool that helps organizations develop and optimize their EV charger deployment strategies based on the organization’s unique priorities.
Market Data | Nov 27, 2023
Number of employees returning to the office varies significantly by city
While the return-to-the-office trend is felt across the country, the percentage of employees moving back to their offices varies significantly according to geography, according to Eptura’s Q3 Workplace Index.
Resiliency | Nov 27, 2023
All levels of government need to act to cope with climate-driven flooding and sea level rise
The latest National Climate Assessment highlights the need for local, state, and federal governments to adopt policies to mitigate the effects of climate-driven flooding and sea level rise, according to a policy expert with the National Resources Defense Council.
Contractors | Nov 27, 2023
A Minnesota GC offers workers Wellness Pods as a mental health option
A maternal need sparked this idea for Gardner Builders.
Cultural Facilities | Nov 21, 2023
Arizona’s Water Education Center will teach visitors about water conservation and reuse strategies
Phoenix-based architecture firm Jones Studio will design the Water Education Center for Central Arizona Project (CAP)—a 336-mile aqueduct system that delivers Colorado River water to almost 6 million people, more than 80% of the state’s population. The Center will allow the public to explore CAP’s history, operations, and impact on Arizona.
MFPRO+ News | Nov 21, 2023
California building electrification laws could prompt more evictions and rent increases
California laws requiring apartment owners to ditch appliances that use fossil fuels could prompt more evictions and rent increases in the state, according to a report from the nonprofit Strategic Actions for a Just Economy. The law could spur more evictions if landlords undertake major renovations to comply with the electrification rule.