The U.S. economy grew by 2.3% in 2017, while fixed investment increased at a annual rate of 7.9%, according to an Associated Builders and Contractors (ABC) analysis of data released today by the Bureau of Economic Analysis.
The economy expanded at an annual rate of 2.6% during the fourth quarter of 2017 after expanding at a 3.2% rate during the third quarter. Nonresidential fixed investment performed similarly to overall fixed investment in the fourth quarter by increasing at a 6.8% rate. This represents the third time in the past four quarters that nonresidential fixed investment increased by at least 6.7%.
The year-end figure for GDP growth of 2.3% is up from 1.5% in 2016 but down from the 2.9% figure posted in 2015. Nonresidential fixed investment increased 4.7% in 2017, its best year since increasing 6.9% in 2014. This followed a 0.6% contraction in 2016.
“Many will look at this report and conclude that consumer spending, the largest component of the economy, drove fourth quarter growth by expanding at a 3.8% annual rate,” said ABC Chief Economist Anirban Basu. “Upon further inspection, however, the fourth quarter consumer spending missed its 3% expectation due to imports increasing at twice the rate of exports. This widening trade deficit subtracted 1.13 percentage points from fourth quarter GDP growth.
“The factors that have helped to accelerate economic growth in America remain in place, including a strengthening global economy, abundant consumer and business confidence, elevated liquidity flowing through the veins of the international financial system and deregulation,” said Basu. “Stakeholders should be aware that although many companies have announced big plans for stepped-up investment, staffing and compensation—due at least in part to the recently enacted tax cut—the plans have yet to fully manifest within the data. The implication is that the U.S. economy is set to roar in 2018.
“As always, contractors are warned to remain wary,” said Basu. “The combination of extraordinary confidence and capital can fuel excess financial leverage and spur asset price bubbles. The implication is that as contractors remain busy, there should be an ongoing stockpiling of defensive cash. That recommendation will be difficult for many contractors to implement, however, with labor shortages and materials costs rising more rapidly and slender profit margins in many construction segments.”
Related Stories
Self-Storage Facilities | Dec 16, 2022
Self-storage development booms in high multifamily construction areas
A 2022 RentCafe analysis finds that self-storage units swelled in conjunction with metros’ growth in apartment complexes.
Industry Research | Dec 15, 2022
4 ways buyer expectations have changed the AEC industry
The Hinge Research Institute has released its 4th edition of Inside the Buyer’s Brain: AEC Industry—detailing the perspectives of almost 300 buyers and more than 1,400 sellers of AEC services.
Multifamily Housing | Dec 13, 2022
Top 106 multifamily housing kitchen and bath amenities – get the full report (FREE!)
Multifamily Design+Construction's inaugural “Kitchen+Bath Survey” of multifamily developers, architects, contractors, and others made it clear that supply chain problems are impacting multifamily housing projects.
Market Data | Dec 13, 2022
Contractors' backlog of work reaches three-year high
U.S. construction firms have, on average, 9.2 months of work in the pipeline, according to ABC's latest Construction Backlog Indicator.
Contractors | Dec 6, 2022
Slow payments cost the construction industry $208 billion in 2022
The cost of floating payments for wages and invoices represents $208 billion in excess cost to the construction industry, a 53% increase from 2021, according to a survey by Rabbet, a provider of construction finance software.
Mass Timber | Dec 1, 2022
Cross laminated timber market forecast to more than triple by end of decade
Cross laminated timber (CLT) is gaining acceptance as an eco-friendly building material, a trend that will propel its growth through the end of the 2020s. The CLT market is projected to more than triple from $1.11 billion in 2021 to $3.72 billion by 2030, according to a report from Polaris Market Research.
Contractors | Nov 30, 2022
Construction industry’s death rate hasn’t improved in 10 years
Fatal accidents in the construction industry have not improved over the past decade, “raising important questions about the effectiveness of OSHA and what it would take to save more lives,” according to an analysis by Construction Dive.
K-12 Schools | Nov 30, 2022
School districts are prioritizing federal funds for air filtration, HVAC upgrades
U.S. school districts are widely planning to use funds from last year’s American Rescue Plan (ARP) to upgrade or improve air filtration and heating/cooling systems, according to a report from the Center for Green Schools at the U.S. Green Building Council. The report, “School Facilities Funding in the Pandemic,” says air filtration and HVAC upgrades are the top facility improvement choice for the 5,004 school districts included in the analysis.
Industry Research | Nov 8, 2022
U.S. metros take the lead in decarbonizing their built environments
A new JLL report evaluates the goals and actions of 18 cities.
Reconstruction & Renovation | Nov 8, 2022
Renovation work outpaces new construction for first time in two decades
Renovations of older buildings in U.S. cities recently hit a record high as reflected in architecture firm billings, according to the American Institute of Architects (AIA).
