"Construction industry stakeholders may need to wait until the spring for decision-makers to have enough confidence to allow for a reacceleration of natural economic growth." —ABC Chief Economist Anirban Basu.
Fixed investment in nonresidential structures and intellectual property grew 12.3 percent and 2.2 percent, respectively, in the third quarter, according to the U.S. Commerce Department’s Nov. 7 report on gross domestic product (GDP). However, the growth was tempered by a 3.3 percent decline in fixed investment in nonresidential equipment.
“Today’s GDP release represents the last piece of information regarding U.S. output and nonresidential fixed investment that is untouched by the federal government shutdown in October and the most recent debt ceiling debate,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Of course, September economic activity could have been impacted by rising uncertainty as the first October budgetary deadline approached.”
Real GDP expanded 2.8 percent on a seasonally adjusted annual rate during the third quarter, following a 2.5 percent increase in the first quarter. Nonresidential fixed investment grew 1.6 percent, while residential fixed investment increased 14.6 percent in the third quarter.
“The third quarter also was impacted by a slew of other headwinds, including rising interest rates,” Basu said. “Fourth quarter GDP will not be much better, and could be worse due to interruptions in federal operations and an associated decline in consumer confidence.
“Because the latest budget deal only keeps the federal government open until Jan. 15 and only raises the debt ceiling through Feb. 7, construction industry stakeholders may need to wait until the spring for decision-makers to have enough confidence to allow for a reacceleration of natural economic growth,” Basu said.
The following segments expanded in the third quarter.
• Personal consumption expenditures were up 1.5 percent after growing 1.8 percent in the second quarter.
• Spending on goods increased 4.3 percent.
• The growth in real private inventories accounted for 2 percent of GDP growth after adding 2.1 percent in the second quarter.
• State and local government spending increased 1.5 percent following a 0.4 percent increase in the second quarter.
• Real final sales of domestically produced output—minus changes in private inventories—rose 2 percent after a 2.1 percent increase in the second quarter.
• Gross domestic purchases were up 4.3 percent after growing 2.6 percent in the second quarter.
A number of key segments did not experience growth in the third quarter.
• Federal government spending fell 1.7 percent, following a 1.6 percent decline in the previous quarter.
• National defense spending dipped 0.7 percent after falling 0.6 percent in the second quarter.
• Nondefense spending fell 3.3 percent after decreasing 3.1 percent in the second quarter.