The U.S. economy contracted at a 1.4% annualized rate during the first quarter of 2022. Investment in nonresidential structures declined at an annual rate of 0.9% during the quarter and has contracted nine of the past 10 quarters, according to an Associated Builders and Contractors analysis of data released today by the U.S. Bureau of Economic Analysis.
“The economy’s woeful performance during 2022’s first quarter complicates matters,” said ABC Chief Economist Anirban Basu. “Conventional wisdom says the economy has enough momentum to contend with the tighter monetary policy the Federal Reserve is pursuing to countervail inflation. Today’s data indicate that the economy is weaker than thought, which means the Federal Reserve will have a very difficult time curbing inflation without driving the economy into recession in late 2022 or 2023.
“That said, the economy should manage to generate some positive momentum during the next two to three quarters,” said Basu. “Consumer demand for goods and services remains strong. The omicron variant affected the economy during the first quarter and that does not appear to be the case during the second. Global supply chains have been adjusting to the dislocations caused by the Russian-Ukraine war. Many state and local governments are flush with cash and continue to plan for a period of elevated infrastructure outlays.
“There is one other bit of good news,” said Basu. “The weakness exhibited by the economy during the first quarter may persuade monetary policymakers to raise interest rates less aggressively. This is a matter of significance for nonresidential contractors, who have become less confident in recent months, according to ABC’s Construction Confidence Indicator. Investment in structures continues to decline in America, in part due to weakness in office, lodging and shopping mall segments. Presumably, additional rapid increases in borrowing costs would further dampen new construction in these categories. It may be that the Federal Reserve will raise interest rates more gradually than they would have knowing that the U.S. economy is already rather fragile.”
![GDP Table](/sites/default/files/inline-images/GDP_Table_Q1_22%20FINAL%20FINAL.jpeg)
![GDP Graph](/sites/default/files/inline-images/GDP_Graph_Q1_22.jpeg)
Related Stories
Market Data | Jul 17, 2020
7 must reads for the AEC industry today: July 17, 2020
Kennedy Middle School's new Administration/Family Center and Tips to make optimal use of salvaged materials.
Market Data | Jul 16, 2020
Final NEPA rule will make it easier to rebuild infrastructure, reinvigorate the economy, and continue protecting the environment
Administration’s final reforms to the federal environmental review process fix problems with prior process, maintain environmental rigor, and accelerate needed infrastructure improvements.
Market Data | Jul 16, 2020
5 must reads for the AEC industry today: July 16, 2020
1928 hotel reimagined as a new resiential and cultural hub and Walgreens plans hundreds of doctor's offices at its stores.
Market Data | Jul 10, 2020
5 must reads for the AEC industry today: July 10, 2020
The world's tallest hybrid timber tower and the Florida Gators have a new $65 million ballpark.
Market Data | Jul 9, 2020
6 must reads for the AEC industry today: July 9, 2020
The world's most sustainable furniture factory and what will construction look like when COVID-19 ends?
Market Data | Jul 8, 2020
North America’s construction output to fall by 6.5% in 2020, says GlobalData
Even though all construction activities have been allowed to continue in most parts of the US and Canada since the start of the COVID-19 pandemic, many projects in the bidding or final planning stages have been delayed or canceled.
Market Data | Jul 8, 2020
5 must reads for the AEC industry today: July 8, 2020
AEMSEN develops concept for sustainable urban living and nonresidential construction has recovered 56% of jobs lost since March.
Market Data | Jul 7, 2020
Nonresidential construction has recovered 56% of jobs lost since March employment report
Nonresidential construction employment added 74,700 jobs on net in June.
Market Data | Jul 7, 2020
7 must reads for the AEC industry today: July 7, 2020
Construction industry adds 158,000 workers in June and mall owners open micro distribution hubs for e-commerce fulfillment.
Market Data | Jul 6, 2020
Nonresidential construction spending falls modestly in May
Private nonresidential spending declined 2.4% in May and public nonresidential construction spending increased 1.2%.