Real gross domestic product (GDP) expanded only 0.5% on a seasonally adjusted annual rate during 2016's first quarter according to an analysis of Bureau of Economic Analysis data released today by Associated Builders and Contractors (ABC). This disappointing figure follows a 1.4% annualized rate of economic output expansion during the fourth quarter of 2015.
Nonresidential fixed investment struggled with a 5.9% decline during the year's first three months after falling 2.1% during 2015's final quarter. Nonresidential fixed investment in structures fared particularly poorly, declining 10.7% during the first quarter on an annualized basis while nonresidential investment in equipment fell 8.6%.
"Aside from consumer spending growth, state and local government spending growth and residential building, very little expanded in America during the first three months of 2016," said ABC Chief Economist Anirban Basu. "It is quite conceivable that the current U.S. economic expansion will end before the economy registers a 3% or better rate of growth for a single calendar year. The last time the U.S. economy expanded more than 3% was in 2005, when the economy expanded 3.4%."
"Corporate profitability has been slipping in recent quarters and the mergers and acquisition marketplace has heated up, an unfavorable sign for nonresidential contractors," said Basu. "Many corporate CEOs continue to use available cash to purchase competitors either to gain access to product pipelines, thereby diminishing required product development expenses, or to generate cost savings by eliminating duplicative functions. The result is a lack of business investment generally and a slowing pace of private nonresidential construction spending growth. If it not for an enormous amount of foreign money coming to our shores, private nonresidential construction growth would have been even softer in early 2016. While falling energy-related investment and seasonal factors represent important parts of the story, there are indications of a broader malaise."
The following segments highlight the first quarter GDP release:
- Personal consumption expenditures rose 1.9% on an annualized basis during the first quarter of 2016 after growing 2.4% during the fourth quarter of 2015.
- Spending on goods inched 0.1% higher during the first quarter after expanding by 1.6% during the fourth quarter.
- Real final sales of domestically produced output increased 0.9% in the first quarter after rising 1.6% in the fourth.
- Federal government spending fell by 1.6% in the year's first quarter after expanding 2.3% in the fourth quarter of 2015.
- Nondefense spending increased by 1.5% in both the first quarter of 2016 and the fourth quarter of 2015.
- National defense spending fell by 3.6% in the fourth quarter after registering a 2.8% increase in the previous quarter.
- State and local government spending increased by 2.9% in the first quarter after falling 1.2% during the prior quarter.
Related Stories
Contractors | Jul 13, 2023
Construction input prices remain unchanged in June, inflation slowing
Construction input prices remained unchanged in June compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics Producer Price Index data released today. Nonresidential construction input prices were also unchanged for the month.
Contractors | Jul 11, 2023
The average U.S. contractor has 8.9 months worth of construction work in the pipeline, as of June 2023
Associated Builders and Contractors reported that its Construction Backlog Indicator remained unchanged at 8.9 months in June 2023, according to an ABC member survey conducted June 20 to July 5. The reading is unchanged from June 2022.
Market Data | Jul 5, 2023
Nonresidential construction spending decreased in May, its first drop in nearly a year
National nonresidential construction spending decreased 0.2% in May, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.06 trillion.
Apartments | Jun 27, 2023
Average U.S. apartment rent reached all-time high in May, at $1,716
Multifamily rents continued to increase through the first half of 2023, despite challenges for the sector and continuing economic uncertainty. But job growth has remained robust and new households keep forming, creating apartment demand and ongoing rent growth. The average U.S. apartment rent reached an all-time high of $1,716 in May.
Industry Research | Jun 15, 2023
Exurbs and emerging suburbs having fastest population growth, says Cushman & Wakefield
Recently released county and metro-level population growth data by the U.S. Census Bureau shows that the fastest growing areas are found in exurbs and emerging suburbs.
Contractors | Jun 13, 2023
The average U.S. contractor has 8.9 months worth of construction work in the pipeline, as of May 2023
Associated Builders and Contractors reported that its Construction Backlog Indicator remained unchanged at 8.9 months in May, according to an ABC member survey conducted May 20 to June 7. The reading is 0.1 months lower than in May 2022. Backlog in the infrastructure category ticked up again and has now returned to May 2022 levels. On a regional basis, backlog increased in every region but the Northeast.
Industry Research | Jun 13, 2023
Two new surveys track how the construction industry, in the U.S. and globally, is navigating market disruption and volatility
The surveys, conducted by XYZ Reality and KPMG International, found greater willingness to embrace technology, workplace diversity, and ESG precepts.
| Jun 5, 2023
Communication is the key to AEC firms’ mental health programs and training
The core of recent awareness efforts—and their greatest challenge—is getting workers to come forward and share stories.
Contractors | May 24, 2023
The average U.S. contractor has 8.9 months worth of construction work in the pipeline, as of April 2023
Contractor backlogs climbed slightly in April, from a seven-month low the previous month, according to Associated Builders and Contractors.
Multifamily Housing | May 23, 2023
One out of three office buildings in largest U.S. cities are suitable for residential conversion
Roughly one in three office buildings in the largest U.S. cities are well suited to be converted to multifamily residential properties, according to a study by global real estate firm Avison Young. Some 6,206 buildings across 10 U.S. cities present viable opportunities for conversion to residential use.