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
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.
Mixed-Use | Jul 18, 2022
Mixed-use development outside Prague uses a material made from leftover bricks
Outside Prague, the Sugar Factory, a mixed-used residential development with public space, marks the largest project to use the sustainable material Rebetong.
