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.”
Related Stories
Hotel Facilities | Nov 8, 2022
6 hotel design trends for 2022-2023
Personalization of the hotel guest experience shapes new construction and renovation, say architects and construction experts in this sector.
Resiliency | Nov 8, 2022
Oregon wildfire risk law prompts extensive backlash from property owners
A bipartisan bill aimed at protecting property owners from wildfires that was passed by the Oregon legislature has prompted a strong backlash.
Building Team | Nov 7, 2022
U.S. commercial buildings decreased energy use intensity from 2012 to 2018
The recently released 2018 Commercial Buildings Energy Consumption Survey (CBECS) by the U.S. Energy Information Administration found that the total floorspace in commercial buildings has increased but energy consumption has not, compared with the last survey analyzing the landscape in 2012.
| Nov 7, 2022
Mixed-use tower in China features world’s highest outdoor pool
Guangxi China Resources Tower, a new 403-meter-tall (1,322 feet) skyscraper in Nanning, China features the world’s highest outdoor pool—at 323 meters (1,060 feet) above grade.
Building Team | Nov 3, 2022
More than half of U.S. contractors say finding skilled workers is big barrier to their growth
More than half of U.S. contractors (55%) say finding enough skilled workers is one of the biggest barriers to growing their business, according to a DEWALT Powering the Future Survey.
Codes and Standards | Nov 2, 2022
New York City construction official wants to boost design-build
The new associate commissioner of alternative delivery in New York City’s Department of Design and Construction aims to encourage more design-build project delivery in the city.
University Buildings | Nov 2, 2022
New Univ. of Calif. Riverside business school building will support hybrid learning
A design-build partnership of Moore Ruble Yudell and McCarthy Building Companies will collaborate on a new business school building at the University of California at Riverside.
Building Team | Nov 1, 2022
Nonresidential construction spending increases slightly in September, says ABC
National nonresidential construction spending was up by 0.5% in September, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau.
| Nov 1, 2022
Updated Florida building codes helped newer homes withstand Hurricane Ian
Newer homes seemed to fare much better than older structures during Hurricane Ian, suggesting that updated Florida building codes made a difference.
Wood | Nov 1, 2022
A European manufacturer says its engineered wood products can store carbon for decades
Metsä Wood, a Finland-based manufacturer of engineered wood products, says its sustainable, material-efficient products can store carbon for decades, helping to combat climate change.
