Commercial, industrial & institutional (CII) construction spending
(Billions of current dollars)
|Spending in Sept. 2001||Percent change from Sept. 2000||Spending in year-to-date 2001||Percent change from year-to-date 2000||2000 total spending||Annual percent change 2000||2001||2002 (f)|
|Source: U.S. Department of Commerce; forecast: Cahners Economics
Product prices little changed
The U.S. Department of Labors composite price index for the whole range of materials and supplies used in construction shows no net inflation in the industry during 2001. Construction material/supply prices declined 0.1 percent on average between August and September of this year. Following inflation of a low 0.9 percent throughout 2000, average construction materials prices this September were running 0.3 percent behind the September 2000 level.
With demand from both residential and nonresidential building sectors now weakening in response to the Sept. 11 attacks and the recessionary economy, average prices for most construction materials/supplies should be stable-to-down right into the spring of 2002.
Trends in building materials prices
(Change, Sept. 2000 to Sept. 2001)
Source: U.S. Department of Labor
|Asphalt/tar strip shingles||3.9%|
|Unitary air conditioners||0.6|
|Structural metal products||-1.5|
|Ceramic floor & wall tile||-0.4|
Job losses, terrorism rattle consumer confidence
The Conference Board's Consumer Confidence Index (CCI) plunged 11.9 percent during October, following an even-steeper loss of 14.9 percent during September. The CCI is falling in response to a multitude of negatives that are affecting consumer finances, job prospects and psyche. This may serve as confirmation that the U.S. economy has entered a recession and the sharp rise in the unemployment rate will make it difficult, if not impossible, for any significant improvement in consumers' outlook to materialize until the first half of next year.
The "Present Situation" subindex decreased 14.2 percent over the last month, and the "Expectations" — defined as six months into the future — component fell by 9.3 percent between September and October. With an October 2001 reading of 85.5 on the Conference Board's scale, where average confidence during the year 1985 is equal to an index level of 100, the most recent composite CCI was 37 percent lower than year ago.
Global recession possible but not likely
For the first time in more than 50 years, there is danger of a global recession. Although it's still unlikely that this unnerving scenario will come to pass — economists currently give it about a one-in-four chance — it's a credible threat should the geopolitical environment become even more chaotic. Entering the final eight weeks of 2001, however, most economic forecasters anticipated at least modest growth this year throughout most of the world, with improvement by mid-2002 in the majority of nations. The World Bank sees GDP growth of 1.3 percent this year.
International economic growth
(Percentage change in GDP)
Source: The World Bank and The Economist