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
Multifamily Housing | Oct 16, 2019
A new study wonders how many retiring adults will be able to afford housing
Harvard’s Joint Center for Housing Studies focuses on growing income disparities among people 50 or older.
Market Data | Oct 9, 2019
Two ULI reports foresee a solid real estate market through 2021
Market watchers, though, caution about a “surfeit” of investment creating a bubble.
Market Data | Oct 4, 2019
Global construction output growth will decline to 2.7% in 2019
It will be the slowest pace of growth in a decade, according to GlobalData.
Market Data | Oct 2, 2019
Spending on nonresidential construction takes a step back in August
Office, healthcare, and public safety are among the fastest-growing sectors, according to the U.S. Census Bureau's latest report.
Market Data | Sep 27, 2019
The global hotel construction pipeline ascends to new record highs
With the exception of Latin America, all regions of the globe either continued to set record high pipeline counts or have already settled into topping-out formations amidst concerns of a worldwide economic slowdown.
Market Data | Sep 25, 2019
Senate introduces The School Safety Clearinghouse Act
Legislation would create a federally funded and housed informational resource on safer school designs.
Market Data | Sep 18, 2019
Substantial decline in Architecture Billings
August report suggests greatest weakness in design activity in several years.
Market Data | Sep 17, 2019
ABC’s Construction Backlog Indicator inches lower in July
Backlog in the heavy industrial category increased by 2.3 months and now stands at its highest level in the history of the CBI series.
Market Data | Sep 13, 2019
Spending on megaprojects, already on the rise, could spike hard in the coming years
A new FMI report anticipates that megaprojects will account for one-fifth of annual construction spending within the next decade.
Architects | Sep 11, 2019
Buoyed by construction activity, architect compensation continues to see healthy gains
The latest AIA report breaks down its survey data by 44 positions and 28 metros.