The U.S. economy expanded at an annualized 3.2% rate during the first quarter of 2019, according to an Associated Builders and Contractors assessment of data released today by the U.S. Bureau of Economic Analysis. The pace of growth exceeded expectations, as many economists predicted growth would be closer to 2.5%.
Growth was fueled by myriad factors, including personal consumption expenditures, private inventory investment, surprisingly rapid growth in exports, state and local government spending and intellectual property. However, residential investment declined.
“Today’s headline number was a blockbuster,” said ABC Chief Economist Anirban Basu. “Despite a slowing global economy, growing labor shortages, soft residential construction and generally lackluster first quarter growth, the overall U.S. economy got off to a fast start in 2019. What’s more, that rapid growth continues to be associated with only moderate inflation.
“That said, nonresidential building investment declined for a third consecutive quarter during the first quarter of 2019, though the pace of decline was not as noteworthy as it was during the third and fourth quarters of last year,” said Basu. “There are many conceivable factors, including weather-induced interruptions in construction activity, concern about overbuilding in office, lodging and other commercial segments, as well as the inability of contractors to fully address demand for construction services due to a dearth of available skilled workers.
“With the year off to a strong start, there appears to be enough momentum to carry the U.S. economy through 2019,” said Basu. “Any fears of a near-term recession have likely been quashed. However, the surprising strength of the U.S. economy may result in a reassessment of policymaking by the Federal Reserve, even though recent statements made by Fed officials have suggested that there wouldn’t be a further rate increase in 2019. If the Federal Reserve decides to pivot and raise rates again later this year, that would represent a negative in terms of demand for construction services due to a corresponding increase in the cost of capital to finance projects.”
Related Stories
Market Data | Feb 9, 2021
Construction Backlog and contractor optimism rise to start 2021, according to ABC member survey
Despite the monthly uptick, backlog is 0.9 months lower than in January 2020.
Market Data | Feb 9, 2021
USGBC top 10 states for LEED in 2020
The Top 10 States for LEED green building is based on gross square feet of certified space per person using 2010 U.S. Census data and includes commercial and institutional projects certified in 2020.
Market Data | Feb 8, 2021
Construction employment stalls in January with unemployment rate of 9.4%
New measures threaten to undermine recovery.
Market Data | Feb 4, 2021
Construction employment declined in 2020 in majority of metro areas
Houston-The Woodlands-Sugar Land and Brockton-Bridgewater-Easton, Mass. have worst 2020 losses, while Indianapolis-Carmel-Anderson, Ind. and Walla Walla, Wash. register largest gains in industry jobs.
Market Data | Feb 3, 2021
Construction spending diverges in December with slump in private nonresidential sector, mixed public work, and boom in homebuilding
Demand for nonresidential construction and public works will decline amid ongoing pandemic concerns.
Market Data | Feb 1, 2021
The New York City market is back on top and leads the U.S. hotel construction pipeline
New York City has the greatest number of projects under construction with 108 projects/19,439 rooms.
Market Data | Jan 29, 2021
Multifamily housing construction outlook soars in late 2020
Exceeds pre-COVID levels, reaching highest mark since 1st quarter 2018.
Market Data | Jan 29, 2021
The U.S. hotel construction pipeline stands at 5,216 projects/650,222 rooms at year-end 2020
At the end of Q4 ‘20, projects currently under construction stand at 1,487 projects/199,700 rooms.
Multifamily Housing | Jan 27, 2021
2021 multifamily housing outlook: Dallas, Miami, D.C., will lead apartment completions
In its latest outlook report for the multifamily rental market, Yardi Matrix outlined several reasons for hope for a solid recovery for the multifamily housing sector in 2021, especially during the second half of the year.
Market Data | Jan 26, 2021
Construction employment in December trails pre-pandemic levels in 34 states
Texas and Vermont have worst February-December losses while Virginia and Alabama add the most.