Leading - And Misleading - Economic Indicators for Construction
The economy roared through the first quarter of 2002. But there are still plenty of doubts as to how robust the growth will be. And there's reason to think construction won't share in the celebration. What's going on?
A week ago (week of April 22) the Commerce Department's Bureau of Economic Analysis announced that real (inflation-adjusted) gross domestic product grew at a torrid 5.8% pace in the first quarter, seasonally adjusted. But nonresidential construction was left out of the party. BEA said, "The major contributors to the increase in real GDP in the first quarter were: Private inventory investment, personal consumption expenditures, government spending, residential fixed investment, and exports. The contributions of these components were partly offset by a decrease in nonresidential structures," which declined for the fourth straight quarter, plunging 20% from the end of 2001 in real terms at a seasonally adjusted annual rate. Over the past year, investment in nonresidential structures has fallen 18% in current dollars (unadjusted for inflation) from $346 billion at the start of 2001 to $285 billion last quarter. Private investment in residential structures in the same period rose 6%, from $427 billion to $456 billion, while government investment in structures and equipment (separate structures data are not available) also rose.