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
Market Data | Oct 6, 2020
Construction sector adds 26,000 workers in September but nonresidential jobs stall
Many commercial firms experience project cancellations.
Market Data | Oct 6, 2020
6 must reads for the AEC industry today: October 6, 2020
Construction rises 1.4% in August while nonresidential construction spending falls slightly.
Market Data | Oct 5, 2020
Nonresidential construction spending falls slightly in August
Of the 16 nonresidential subcategories, nine were down on a monthly basis.
Market Data | Oct 5, 2020
Construction spending rises 1.4% in August as residential boom outweighs private nonresidential decline and flat public categories
Construction officials caution that demand for non-residential construction will continue to stagnate without new federal coronavirus recovery measures, including infrastructure and liability reform.
Market Data | Oct 5, 2020
7 must reads for the AEC industry today: October 5, 2020
Zaha Hadid unveils 2 Murray Road and the AEC industry is weathering COVID-19 better than most.
Market Data | Oct 2, 2020
AEC industry is weathering COVID-19 better than most
Nearly one-third of firms have had layoffs, more than 90% have experienced project delays.
Market Data | Oct 2, 2020
6 must reads for the AEC industry today: October 2, 2020
BIG imagines how to live on the moon and smart buildings stand on good data.
Market Data | Oct 1, 2020
Two-thirds of metros shed construction jobs from August 2019 to August 2020
Houston-The Woodlands-Sugar Land and Brockton-Bridgewater-Easton, Mass. have worst 12-month losses, while Indianapolis-Carmel-Anderson, Ind. and Niles-Benton Harbor, Mich. top job gainers.
Market Data | Oct 1, 2020
6 must reads for the AEC industry today: October 1, 2020
David Adjaye to receive 2021 Royal Gold Medal for Architecture and SOM reimagines the former Cook County Hospital.
Market Data | Sep 30, 2020
6 must reads for the AEC industry today: September 30, 2020
Heatherwick Studio designs The Cove for San Francisco and Washington, D.C.'s first modular apartment building.