The U.S. economy grew at an annual rate of 2.6% in the fourth quarter of 2018, according to an Associated Builders and Contractors analysis of data published today by the U.S. Bureau of Economic Analysis. Year-over-year GDP growth was 3.1%, while average growth for 2018 was 2.9%.
“Today’s GDP report confirms continued strong investment in nonresidential segments in America,” said ABC Chief Economist Anirban Basu. “Separately, construction spending data show significant expenditures on the construction of data centers, hotel rooms, theme parks and fulfillment centers. These data also indicate stepped up public construction spending in categories such as transportation, education, and water systems. Despite that, today’s GDP release indicated that investment in nonresidential structures actually declined 4.2% on an annualized basis during last year’s fourth quarter. Despite that setback, this form of investment was up by 5% for the entirety of 2018.
“Undoubtedly, some attention will be given to the fact that the U.S. economy expanded by just shy of 3% in 2018,” said Basu. “Unless that figure is revised upward in subsequent releases, it will mean that America has failed to reach the 3% annual threshold since 2005. But while much attention will be given to a perceived shortfall in growth, the fourth quarter figure of 2.6% signifies that the U.S. economy entered this year with substantial momentum. Were it not for a weak residential construction sector, 3% growth would have been attained. Moreover, the data indicate strength in disposable income growth and in business investment.
“It is quite likely that the U.S. economy will expand at around 2% this year,” said Basu. “Though interest rates remain low and hiring is still brisk, a number of leading indicators suggest that the nation’s economy will soften somewhat during the quarters ahead, which can be partly attributed to a weakening global economy. This won’t unduly impact nonresidential construction activity, however, since the pace of activity in this segment tends to lag the overall economy, and strong nonresidential construction spending expected in 2019. Finally, ABC’s Construction Backlog Indicator continues to reflect strong demand for contractors, which have nearly nine months of work lined up.”
Related Stories
Industry Research | Apr 25, 2023
The commercial real estate sector shouldn’t panic (yet) about recent bank failures
A new Cushman & Wakefield report depicts a “well capitalized” banking industry that is responding assertively to isolated weaknesses, but is also tightening its lending.
Architects | Apr 21, 2023
Architecture billings improve slightly in March
Architecture firms reported a modest increase in March billings. This positive news was tempered by a slight decrease in new design contracts according to a new report released today from The American Institute of Architects (AIA). March was the first time since last September in which billings improved.
Contractors | Apr 19, 2023
Rising labor, material prices cost subcontractors $97 billion in unplanned expenses
Subcontractors continue to bear the brunt of rising input costs for materials and labor, according to a survey of nearly 900 commercial construction professionals.
Data Centers | Apr 14, 2023
JLL's data center outlook: Cloud computing, AI driving exponential growth for data center industry
According to JLL’s new Global Data Center Outlook, the mass adoption of cloud computing and artificial intelligence (AI) is driving exponential growth for the data center industry, with hyperscale and edge computing leading investor demand.
Healthcare Facilities | Apr 13, 2023
Healthcare construction costs for 2023
Data from Gordian breaks down the average cost per square foot for a three-story hospital across 10 U.S. cities.
Higher Education | Apr 13, 2023
Higher education construction costs for 2023
Fresh data from Gordian breaks down the average cost per square foot for a two-story college classroom building across 10 U.S. cities.
Market Data | Apr 13, 2023
Construction input prices down year-over-year for first time since August 2020
Construction input prices increased 0.2% in March, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics Producer Price Index data released today. Nonresidential construction input prices rose 0.4% for the month.
Market Data | Apr 11, 2023
Construction crane count reaches all-time high in Q1 2023
Toronto, Seattle, Los Angeles, and Denver top the list of U.S/Canadian cities with the greatest number of fixed cranes on construction sites, according to Rider Levett Bucknall's RLB Crane Index for North America for Q1 2023.
Contractors | Apr 11, 2023
The average U.S. contractor has 8.7 months worth of construction work in the pipeline, as of March 2023
Associated Builders and Contractors reported that its Construction Backlog Indicator declined to 8.7 months in March, according to an ABC member survey conducted March 20 to April 3. The reading is 0.4 months higher than in March 2022.
Market Data | Apr 6, 2023
JLL’s 2023 Construction Outlook foresees growth tempered by cost increases
The easing of supply chain snags for some product categories, and the dispensing with global COVID measures, have returned the North American construction sector to a sense of normal. However, that return is proving to be complicated, with the construction industry remaining exceptionally busy at a time when labor and materials cost inflation continues to put pricing pressure on projects, leading to caution in anticipation of a possible downturn. That’s the prognosis of JLL’s just-released 2023 U.S. and Canada Construction Outlook.
