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
| May 22, 2012
Casaccio Architects and GYA Architects join to form Casaccio Yu Architects
Architects Lee A. Casaccio, AIA, LEED AP, and George Yu, AIA, share leadership of the new firm.
| May 22, 2012
O’Connell Robertson acquires Mitchell Design Consultancy
Mary Ann A. Mitchell, AIA, IIDA, MDC principal and founder, joins O’Connell Robertson as part of the acquisition.
| May 21, 2012
$61,000 awarded to students in Cleveland’s ACE Mentor Program
Mayor Frank G. Jackson gives keynote address at scholarship event for 80 Cleveland Metropolitan School District students involved in the ACE Mentor Program, which provides guidance and assistance for students interested in careers in the integrated construction industry.
| May 21, 2012
Wayne, Pa.'s Radnor Middle School wins national green award
Radnor Middle School among the most sustainable schools in the U.S.
| May 21, 2012
Winchester High School receives NuRoof system
Metal Roof Consultants attended a school board meeting and presented a sloped metal retrofit roof as an alternative to tearing off the existing roof and replacing it with another flat roof.
| May 17, 2012
EMerge Alliance forms new Campus Microgrid Technical Standards Committee
Intel leading the charge to connect multiple DC microgrids throughout commercial buildings; others invited to join effort.
| May 16, 2012
AIA issues guide to IGCC
Getting the IgCC adopted in all 50 states and in jurisdictions across the country is the primary mission of the ICC, which published the code in March.
| May 16, 2012
Architecture Billings Index reverts to negative territory
Decline is possibly a brief pause from unusually strong winter activity.
| May 16, 2012
AEG releases 3D video of L.A.'s Farmers Field
The Los Angeles Convention Center footage depicts the new convention center hall spaces, including a new lobby above Pico Boulevard, pre-function space, and what will be the largest multi-purpose ballroom in Los Angeles.
| May 16, 2012
Balfour Beatty Construction taps Kiger as VP of operations
Kiger will manage current relationships and pursue other strategic clients, including select healthcare clients and strategic project pursuits in the Central Tennessee region.