Real gross domestic product (GDP) expanded 2.9 percent on a seasonally adjusted annualized rate during the third quarter of 2016, according to an analysis of Bureau of Economic Analysis data released today by Associated Builders and Contractors (ABC). This follows a 1.4 percent increase during the second quarter and represents the tenth consecutive quarter of economic expansion.
Nonresidential fixed investment, a category closely aligned with construction and other forms of business investment, expanded at a 1.2 percent annualized rate during the third quarter after growing 1 percent during the second. Investment in structures led the way, increasing by 5.4 percent in the third quarter after falling 2.1 percent during the second. Investment in equipment fell 2.7 percent for the quarter, while investment in intellectual property products expanded 4 percent. Residential investment continued to fall, declining 6.2 percent in the third quarter after falling 7.7 percent during the second.
The following highlights emerged from today’s third quarter GDP release. All growth figures are presented as seasonally adjusted annualized rates:
- Personal consumption expenditures expanded 2.1 percent on an annualized basis during the third quarter of 2016 after growing 4.3 percent during the second quarter of 2016.
- Spending on goods rose 2.2 percent during the third quarter after expanding by 7.1 percent during the previous quarter.
- Real final sales of domestically produced output increased 2.3 percent in the third quarter after increasing 2.6 percent in the second.
- Federal government spending expanded 2.5 percent in the year’s third quarter after contracting during each of the prior two quarters.
- Nondefense government spending increased 3 percent during the quarter following an increase of 3.8 percent during the second.
- National defense spending grew by 2.1 percent during the third quarter after registering a 3.2 percent decline in the previous quarter.
- State and local government spending fell by 0.7 percent in the third quarter after falling 2.5 percent in the second quarter.
“The acceleration in real GDP growth was driven by a combination of factors, including an upturn in exports, a smaller decrease in state and local government spending and an upturn in federal government spending. One of the biggest impacts came from greater private inventory investment, likely in response to expectations for reasonably strong consumer spending. Growth in personal consumption expenditures was responsible for almost half of third quarter GDP growth. However, this build in inventories is likely to subtract from economic growth in future quarters, though not massively,” says ABC Chief Economist Anirban Basu.
“Third quarter growth was solid, but future quarters may not be as good,” Basu says. “The economy will have to deal with a number of headwinds going forward, including a stronger dollar, building inflationary pressures and higher interest rates. Consumer spending growth will continue to lead the recovery. While this will help support construction spending in certain categories, including distribution centers, nonresidential investment in structures is likely to expand only slowly in early 2017.”
Related Stories
Market Data | Sep 29, 2020
6 must reads for the AEC industry today: September 29, 2020
Renovation to Providence's downtown library is completed and Amazon to build 1,500 new last-mile warehouses.
Market Data | Sep 25, 2020
5 must reads for the AEC industry today: September 25, 2020
AIA releases latest 2030 Commitment results and news delivery robots could generate trillions for U.S. economy.
Market Data | Sep 24, 2020
6 must reads for the AEC industry today: September 24, 2020
SOM's new waterfront neighborhood and a portable restroom designed for mobility.
Market Data | Sep 23, 2020
Architectural billings in August still show little sign of improvement
The pace of decline during August remained at about the same level as in July and June.
Market Data | Sep 23, 2020
7 must reads for the AEC industry today: September 23, 2020
The new Theodore Presidential Library and the AIA/HUD's Secretary's Awards honor affordable, accessible housing.
Market Data | Sep 22, 2020
6 must reads for the AEC industry today: September 22, 2020
Construction employment declined in 39 states and no ease of lumber prices in sight.
Market Data | Sep 21, 2020
Washington is the US state with the most value of construction projects underway, says GlobalData
Of the top 10 largest projects in the Washington state, nine were in the execution stage as of August 2020.
Market Data | Sep 21, 2020
Construction employment declined in 39 states between August 2019 and 2020
31 states and DC added jobs between July and August.
Market Data | Sep 21, 2020
6 must reads for the AEC industry today: September 21, 2020
Four projects receive 202 AIA/ALA Library Building Award and Port San Antonio's new Innovation Center.
Market Data | Sep 18, 2020
Follow up survey of U.S. code officials demonstrates importance of continued investment in virtual capabilities
Existing needs highlight why supporting building and fire prevention departments at the federal, state, and local levels is critical.