The U.S. economy expanded at an annualized rate of 2.1% in the fourth quarter of 2019, despite investment in structures declining at an annualized rate of 10.1%, according to an Associated Builders and Contractors analysis of data released today by the U.S. Bureau of Economic Analysis. Investment in structures contracted for three consecutive quarters and declined 4.4% during 2019.
In 2019, real GDP expanded by 2.3%, which was slower than the 2.9% rate of growth observed in 2018. Investment in structures contracted 4.4% in 2019 after expanding by 4.1% in 2018.
“Last year will be remembered as decent but unspectacular for the U.S. economy,” said ABC Chief Economist Anirban Basu. “Strong consumer spending, historically low unemployment, surging asset prices and healthy backlog levels, according to ABC’s Construction Backlog Indicator, were offset by soft business investment, flattening levels of nonresidential construction and soaring national debt. In addition, key segments of the economy, including manufacturing and agriculture, were particularly weak.
“But 2019 tells us little about 2020 dynamics,” said Basu. “Coming into last year, many expected interest rates and the general cost of capital to rise. Instead, interest rates dipped, creating an improved environment for purchasers of construction services. Last year was also shrouded by fears of worsening trade wars, but with the ratification of the USMCA and the attainment of a first phase trade deal with China, the level of uncertainty has abated. Through the first month of 2020, this has translated into rising stock prices, which should induce greater business investment.
“This year’s presidential election may cause some purchasers of construction services to adopt a wait-and-see attitude,” said Basu. “Contractors are currently upbeat about their prospects over the next two quarters, according to ABC’s Construction Confidence Index. However, given contracting levels of investment in structures, it is unclear if that will persist through the end of 2020.”
Related Stories
Market Data | Sep 28, 2021
Design-Build projects should continue to take bigger shares of construction spending pie over next five years
FMI’s new study finds collaboration and creativity are major reasons why owners and AEC firms prefer this delivery method.
Market Data | Sep 22, 2021
Architecture billings continue to increase
The ABI score for August was 55.6, up from July’s score of 54.6.
Market Data | Sep 20, 2021
August construction employment lags pre-pandemic peak in 39 states
The coronavirus delta variant and supply problems hold back recovery.
Market Data | Sep 15, 2021
ABC’s Construction Backlog Indicator plummets in August; Contractor Confidence down
ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels all fell modestly in August.
Market Data | Sep 7, 2021
Construction sheds 3,000 jobs in August
Gains are limited to homebuilding as other contractors struggle to fill both craft and salaried positions.
Market Data | Sep 3, 2021
Construction workforce shortages reach pre-pandemic levels
Coronavirus continues to impact projects and disrupt supply chains.
Multifamily Housing | Sep 1, 2021
Top 10 outdoor amenities at multifamily housing developments for 2021
Fire pits, lounge areas, and covered parking are the most common outdoor amenities at multifamily housing developments, according to new research from Multifamily Design+Construction.
Market Data | Sep 1, 2021
Construction spending posts small increase in July
Coronavirus, soaring costs, and supply disruptions threaten to erase further gains.
Market Data | Sep 1, 2021
Bradley Corp. survey finds office workers taking coronavirus precautions
Due to the rise in new strains of the virus, 70% of office workers have implemented a more rigorous handwashing regimen versus 59% of the general population.
Market Data | Aug 31, 2021
Three out of four metro areas add construction jobs from July 2020 to July 2021
COVID, rising costs, and supply chain woes may stall gains.