The U.S. economy grew at an annual rate of 2.6% in the fourth quarter of 2018, according to an Associated Builders and Contractors analysis of data published today by the U.S. Bureau of Economic Analysis. Year-over-year GDP growth was 3.1%, while average growth for 2018 was 2.9%.
“Today’s GDP report confirms continued strong investment in nonresidential segments in America,” said ABC Chief Economist Anirban Basu. “Separately, construction spending data show significant expenditures on the construction of data centers, hotel rooms, theme parks and fulfillment centers. These data also indicate stepped up public construction spending in categories such as transportation, education, and water systems. Despite that, today’s GDP release indicated that investment in nonresidential structures actually declined 4.2% on an annualized basis during last year’s fourth quarter. Despite that setback, this form of investment was up by 5% for the entirety of 2018.
“Undoubtedly, some attention will be given to the fact that the U.S. economy expanded by just shy of 3% in 2018,” said Basu. “Unless that figure is revised upward in subsequent releases, it will mean that America has failed to reach the 3% annual threshold since 2005. But while much attention will be given to a perceived shortfall in growth, the fourth quarter figure of 2.6% signifies that the U.S. economy entered this year with substantial momentum. Were it not for a weak residential construction sector, 3% growth would have been attained. Moreover, the data indicate strength in disposable income growth and in business investment.
“It is quite likely that the U.S. economy will expand at around 2% this year,” said Basu. “Though interest rates remain low and hiring is still brisk, a number of leading indicators suggest that the nation’s economy will soften somewhat during the quarters ahead, which can be partly attributed to a weakening global economy. This won’t unduly impact nonresidential construction activity, however, since the pace of activity in this segment tends to lag the overall economy, and strong nonresidential construction spending expected in 2019. Finally, ABC’s Construction Backlog Indicator continues to reflect strong demand for contractors, which have nearly nine months of work lined up.”
Related Stories
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.
Market Data | Jan 19, 2021
Architecture Billings continue to lose ground
The pace of decline during December accelerated from November.