Real gross domestic product (GDP) expanded by just 0.7% (seasonally adjusted annual rate) during the fourth quarter of 2015, according to an analysis of Bureau of Economic Analysis data released by Associated Builders and Contractors (ABC). This paltry growth follows a 2% increase during the year's third quarter and a 3.9% increase during the second quarter. For the year, GDP expanded by 2.4%, matching the rate of growth seen in 2014.
Nonresidential fixed investment shrank by 1.8% in the fourth quarter, the first time the segment has contracted since the third quarter of 2012. For the year, nonresidential fixed investment expanded by 2.9% after growing by 6.2% in 2014 and 3% in 2013.
"The economy did not end the year well," ABC Chief Economist Anirban Basu said. "Today's GDP data adds weight to the argument that the U.S. is in a corporate profits recession, an industrial recession, and was experiencing a softening of investments. With the exception of the residential building sector, business capital outlays have declined as corporations deal with a combination of sagging exports, competitive imports, declining energy related investments, rising wage pressures and healthcare costs.
"Recent turbulence in financial markets suggest that capital availability may continue to soften," Basu said. "While residential construction is likely to continue to recover given the combination of low interest rates and accelerating household formation, nonresidential construction spending growth may begin to sputter a bit as those who deploy capital become more defensive. This is not to suggest that nonresidential construction spending is set to decline. Many contractors continue to report significant and growing backlog. However, the current situation suggests that the growth in backlog and ultimately in spending may not be quite as rapid as it was earlier in 2015."
Six key input prices rose or remained unchanged in October on a monthly basis, while one remained unchanged:
- Personal consumption expenditures expanded 2.2% in the fourth quarter after growing by 3% in the third quarter.
- Spending on goods grew 2.4% in the fourth quarter after expanding 5% in the third quarter and 5.5% in the second quarter.
- Real final sales of domestically produced output increased 1.2% for the fourth quarter after a 2.7% increase in the third quarter.
- Federal government spending increased 2.7% in the fourth quarter, the segment's largest increase since the third quarter of 2014.
- Nondefense spending increased 1.4% in the fourth quarter after expanding 2.8% in the previous quarter.
- National defense spending expanded by 3.6% in the fourth quarter after contracting by 1.4% during the third.
- State and local government spending contracted by 0.6% in the fourth quarter after increasing by 2.8% in the third quarter.
Related Stories
Multifamily Housing | Jan 20, 2021
Abandoned Miami hospital gets third life as waterfront condo development
The 1920s King Cole Hotel becomes the Ritz-Carlton Residences Miami in the largest residential adaptive reuse project in South Florida.
Market Data | Jan 19, 2021
2021 construction forecast: Nonresidential building spending will drop 5.7%, bounce back in 2022
Healthcare and public safety are the only nonresidential construction sectors that will see growth in spending in 2021, according to AIA's 2021 Consensus Construction Forecast.
Multifamily Housing | Jan 14, 2021
The Weekly show, Jan 14, 2021: Passive House innovations, and launching a design studio during the pandemic
This week on The Weekly show, BD+C editors speak with AEC industry leaders about innovations in Passive House design, and the challenges of building a design team and opening a new design studio during a pandemic.
Multifamily Housing | Jan 11, 2021
McHugh Construction completes 5th-tallest all-residential building in the U.S.
McHugh Construction Completes Two Chicago Apartment Projects for Fifield Cos. and Crescent Heights, Including NEMA Chicago –Tallest All-Residential Building in Chicago and 5th Tallest in North Americ
Multifamily Housing | Jan 8, 2021
Student housing development in the time of COVID-19
Despite the coronavirus pandemic, many college and university residences were completed in time for classes, live or virtual. Here are 14 of the best.
Contractors | Jan 7, 2021
The Weekly show, Jan 7, 2021: Preconstruction boot camp, and leadership strategies for navigating a challenging market
The January 7 episode of BD+C's The Weekly is available for viewing on demand.
Contractors | Jan 4, 2021
Optimizing construction projects with value engineering
When value engineering is referenced in our industry, our minds may immediately go to a process that reduces project cost by slashing scope or decreasing the quality of materials used. However, that is not necessarily what the definition should be.
AEC Tech | Dec 17, 2020
The Weekly show: The future of eSports facilities, meet the National Institute for AI in Construction
The December 17 episode of BD+C's The Weekly is available for viewing on demand.
Multifamily Housing | Dec 16, 2020
What the Biden Administration means for multifamily construction
What can the multifamily real estate sector expect from Biden and Company? At the risk of having egg, if not a whole omelet, on my face, let me take a shot.
Giants 400 | Dec 16, 2020
Download a PDF of all 2020 Giants 400 Rankings
This 70-page PDF features AEC firm rankings across 51 building sectors, disciplines, and specialty services.