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
Market Data | Jul 21, 2022
Architecture Billings Index continues to stabilize but remains healthy
Architecture firms reported increasing demand for design services in June, according to a new report today from The American Institute of Architects (AIA).
Market Data | Jul 21, 2022
Despite deteriorating economic conditions, nonresidential construction spending projected to increase through 2023
Construction spending on buildings is projected to increase just over nine percent this year and another six percent in 2023, according to a new report from the American Institute of Architects (AIA).
Mixed-Use | Jul 21, 2022
Former Los Angeles Macy’s store converted to mixed-use commercial space
Work to convert the former Westside Pavilion Macy's department store in West Los Angeles to a mixed-use commercial campus recently completed.
Building Team | Jul 20, 2022
San Francisco overtakes Tokyo as the world’s most expensive city for construction
San Francisco has overtaken Tokyo as the world’s most expensive city for construction, according to a new report from Turner & Townsend.
Libraries | Jul 20, 2022
Canada to open one of the world’s largest library and archive facilities
When it opens in 2026, Ādisōke is expected to be one of the largest library and archive facilities in the world.
Energy-Efficient Design | Jul 19, 2022
All is not lost: 3 ways architects can respond to the Supreme Court’s EPA ruling
The U.S. Supreme Court’s ruling to limit the Environmental Protection Agency’s power to regulate greenhouse gas (GHG) emissions from power plants dealt a significant blow to our ability to fight the climate crisis with federal policy.
Office Buildings | Jul 19, 2022
Austin adaptive reuse project transforms warehouse site into indoor-outdoor creative office building
Fifth and Tillery, an adaptive reuse project, has revitalized a post-industrial site in East Austin, Texas.
Women in Design+Construction | Jul 18, 2022
Registration is open for BD+C's 2022 Women in Design+Construction Conference
Join your AEC industry peers in Chicago, September 26-28, 2022, for the 7th annual Women in Design+Construction Conference, hosted by the BD+C editorial team and the 35-person WIDC Advisory Board.
Airports | Jul 18, 2022
FAA will award nearly $1 billion for airport projects
The Federal Aviation Administration (FAA) will award nearly $1 billion to 85 airports of all sizes across the country to improve terminals.
Building Team | Jul 18, 2022
Understanding the growing design-build market
FMI’s new analysis of the design-build market forecast for the next fives years shows that this delivery method will continue to grow, despite challenges from the COVID-19 pandemic.
