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 | Aug 28, 2017
U.S. hotel construction pipeline is up 7% year-over-year
For the economy, the rate of growth may be low but it’s running on all cylinders.
Market Data | Aug 23, 2017
Architecture Billings Index growth moderates
“The July figures show the continuation of healthy trends in the construction sector of our economy,” said AIA Chief Economist, Kermit Baker.
Architects | Aug 21, 2017
AIA: Architectural salaries exceed gains in the broader economy
AIA’s latest compensation report finds average compensation for staff positions up 2.8% from early 2015.
Market Data | Aug 20, 2017
Some suburban office markets are holding their own against corporate exodus to cities
An analysis of mortgage-backed loans suggests that demand remains relatively steady.
Market Data | Aug 17, 2017
Marcum Commercial Construction Index reports second quarter spending increase in commercial and office construction
Spending in all 12 of the remaining nonresidential construction subsectors retreated on both an annualized and monthly basis.
Industry Research | Aug 11, 2017
NCARB releases latest data on architectural education, licensure, and diversity
On average, becoming an architect takes 12.5 years—from the time a student enrolls in school to the moment they receive a license.
Market Data | Aug 4, 2017
U.S. grand total construction starts growth projection revised slightly downward
ConstructConnect’s quarterly report shows courthouses and sports stadiums to end 2017 with a flourish.
Market Data | Aug 2, 2017
Nonresidential Construction Spending falls in June, driven by public sector
June’s weak construction spending report can be largely attributed to the public sector.
Market Data | Jul 31, 2017
U.S. economic growth accelerates in second quarter; Nonresidential fixed investment maintains momentum
Nonresidential fixed investment, a category of GDP embodying nonresidential construction activity, expanded at a 5.2% seasonally adjusted annual rate.
Multifamily Housing | Jul 27, 2017
Apartment market index: Business conditions soften, but still solid
Despite some softness at the high end of the apartment market, demand for apartments will continue to be substantial for years to come, according to the National Multifamily Housing Council.
