Tag Archive for 'economy'

Wells Fargo Reports: Private Sector Compensation Costs Slow Sharply in Q2

Wells_Fargo_Securities_logoCompensation costs slowed markedly in Q2, increasing just 0.2 percent. Weakness appears concentrated among incentive paid workers, but still may raise doubts among the FOMC as to the strength of wage growth.

Better than the Headline Indicates but Still Not Great

Employment costs rose far short of expectations in Q2, increasing just 0.2 percent. The closely watched wages & salaries component rose by the smallest amount since 1982, up only 0.2 percent. The slowdown was concentrated among sales occupations, which are more likely to receive incentive compensation. Ex-incentive paid workers, wage growth continues to show a modest upward trend.

Trend in Wage Growth Remains Disappointing

Compensation costs for government workers picked up in Q2, driven by both wages and benefits. In contrast, private sector benefits fell for the second time since the series began in 2001.

The slowdown in ECI wage growth, along with no clear pickup in the average hourly earnings series of the payroll report may lead the FOMC to reevaluate how much slack remains in the labor market and how fast inflation will return to target.

Private Sector Compensation Costs Slow Sharply in Q2 Private Sector Compensation Costs Slow Sharply in Q2 Private Sector Compensation Costs Slow Sharply in Q2 Private Sector Compensation Costs Slow Sharply in Q2

ABC Reports: Nonresidential Fixed Investment Falls in Second Quarter

CEU2“In the first half of 2015, both the broader economy and nonresidential investment lost the momentum they had coming into the year.” ABC Chief Economist Anirban Basu.

GDP_Q2_2015Nonresidential fixed investment fell by 0.6 percent during the second quarter after expanding by 1.6 percent during the first quarter, according to the July 30 real gross domestic product (GDP) report by the Bureau of Economic Analysis (BEA). For the economy as a whole, real GDP expanded by 2.3 percent (seasonally adjusted annual rate) during the second quarter following a 0.6 percent increase during the year’s first quarter. Note that the first quarter estimate for nonresidential fixed investment was revised upward from -3.4 percent annualized growth.

“In the first half of 2015, both the broader economy and nonresidential investment lost the momentum they had coming into the year,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Rather than indicating renewed progress in terms of achieving a more robust recovery, today’s GDP release indicates that a variety of factors helped to stall investment in nonresidential structures. There are many viable explanations, including a weaker overall U.S. economy, a stronger U.S. dollar, decreased investment in structures related to the nation’s energy sector, soft public spending, and uncertainty regarding monetary policy and other abstracts of public policy. While the expectation is that the second half of the year will be better, unfortunately not much momentum is being delivered by the year’s initial six months.

“Perhaps the most salient facet of this GDP release was the revisions,” said Basu. “The BEA revised the first quarter estimate upward from -0.2 percent to 0.6 percent annualized growth. This is not surprising; many economists insisted that the economy did not shrink in the first quarter. However, the BEA also downwardly revised growth figures from the fourth quarter of 2011 to the fourth quarter of 2014. Over that period, GDP increased at an average annual rate of 2.1 percent, 0.3 percentage points lower than previously thought. These revisions could be a function of the agency’s ongoing effort to tackle residual seasonality, a pattern in which seasonal adjustments led to repeated first quarter slowdowns. It will take a few more quarters to understand the full impact of the improved seasonal adjustments.”

Performance of key segments during the first quarter:

  • Investment in nonresidential structures decreased at a 1.6 percent rate after decreasing at a 7.4 percent rate in the first quarter.
  • Personal consumption expenditures added 1.99 percent to GDP after contributing 1.19 percent in the first quarter.
  • Spending on goods grew 1.1 percent from the first quarter.
  • Real final sales of domestically produced output – minus changes in private inventories – increased 2.5 percent for the second quarter after a 2.5 percent increase in the first quarter.
  • Federal government spending decreased 1.1 percent in the second quarter after increasing by 1.1 percent in the first quarter.
  • Nondefense spending decreased 0.5 percent after expanding by 1.2 percent in the previous quarter.
  • National defense spending fell 1.5 percent after growing 1 percent in the first quarter.
  • State and local government spending grew 2 percent during the second quarter after a decrease of 0.8 percent in the first.

To view the previous GDP report, click here .

ABC Reports: June Construction Unemployment Rates Improve in 45 States from 2014


Analysis by Bernard Markstein

Construction employment stalled nationally on a seasonally adjusted (SA) basis in June. However, as expected, not seasonally adjusted (NSA) employment increased from May. The result was that 38 states experienced a decline in their estimated NSA construction unemployment rate.

Construction activity and employment continues to improve from a year ago. Thus, on a year-over-year basis, the NSA construction unemployment rates for the country and 45 states were down in June.

For the first half of the year, SA construction jobs rose 105,000, while the industry added 262,000 jobs from June 2014 to June 2015 on an NSA basis.

The Census Bureau reported on July 1 that total SA nominal (current) dollar construction spending increased 0.8 percent in May. Nonresidential construction spending, which struggled in 2014, has advanced for four consecutive months. Total construction spending increased for six months straight.

The Top Five States

The five states with the lowest construction unemployment rates were:

  1. South Dakota*
  2. Nebraska*
  3. North Dakota
  4. Idaho and Montana (tie)

* Unemployment Rate for Construction and Mining

All of the top five states are in the same geographic region, although the Census Bureau places Idaho and Montana in a different census division (West North Central for Nebraska, North Dakota and South Dakota; Mountain for Idaho and Montana). Wyoming, which would fit in neatly with this group (part of the Mountain census division), was just out of the top five at number six (up from number eight in May).

Four of the top five states were also among the top five in May with a somewhat different order. South Dakota moved into the number one spot from being tied for second with North Dakota in May. Nebraska slipped into the second position from the first in May.

North Dakota fell to third place with the decline in its position, undoubtedly largely due to the slump in oil prices and the resulting slowdown in exploration and drilling new wells. Nonetheless, both the construction unemployment rate and the overall state unemployment rate are at a low level that other states would envy.

Fourth place was a tie between Idaho and Montana. For Idaho, June’s ranking was an improvement from its number seven position in May. Montana moved up from fifth place in May based on revised data (it had previously been in fourth place). Maryland, with a construction and mining unemployment rate,  took over Montana’s fourth place in May based on revised data (originally reported as number five) but fell to tenth place in June in a tie with Utah, which also held tenth place in May.

The Bottom Five States

The five states with the highest construction unemployment rates (from lowest to highest) were:

  1. New Mexico
  2. Rhode Island
  3. Georgia and West Virginia (tie)
  4. Mississippi

Three of the states with the five highest construction unemployment rates in May were among the five highest in June: Georgia, Mississippi and Rhode Island. For the second month in a row, Mississippi had the highest rate in the nation. On the positive side, the estimated construction unemployment rate for all 50 states fell below 10 percent for the first time since October 2014.

Georgia and West Virginia were tied for second highest in June. Georgia also had the second highest rate in May based on revised data (originally reported as third highest). West Virginia moved from tied with Connecticut and Missouri for eleventh highest in May to its tie with Georgia for second highest rate in June. West Virginia was one of five states with a year-over-year increase in their estimated construction unemployment rates and one of 12 states with an increase from their May rate. Among those 12 states, West Virginia along with New Hampshire had the largest monthly increase—1.6 percent.

Rhode Island moved from fifth highest in May based on revised data (originally reported as sixth highest) to fourth highest in June. New Mexico took Rhode Island’s fifth place position in June moving down from 17th highest in May.

New Jersey and South Carolina, which tied for third highest in May based on revised data, were sixth and seventh highest, respectively, in June. Alabama and California tied with South Carolina for seventh highest in June. In May, California’s construction unemployment rate was also seventh highest, while Alabama’s rate was sixth highest based on revised data (originally reported as fifth highest).

State_RankingRead more on ABC’s website.


Associated Builders and Contractors (ABC) launched its state-by-state economic analysis earlier this year with the release of economist Bernard M. Markstein’s analysis of construction’s contribution to each state’s gross domestic product (GDP). ABC will be releasing Markstein’s next analysis of GDP data August 11, 2015

Unique to ABC, Markstein’s state-level construction unemployment estimate and analysis of state-level construction job markets for June is below. This analysis is produced monthy in addition to ABC’s existing national economic data and analysis. Background on how the data was derived and Markstein’s methodology is available on ABC’s website. 

Statement from Transportation Construction Coalition Co-chairs

ee0d071a-4431-491a-ae5f-0d9154114faeStatement Relating to Senate

Passage of the DRIVE Act

The following is a statement from Transportation Construction Coalition Co-chairs Pete Ruane, president & CEO of the American Road & Transportation Builders Association, and Stephen Sandherr, chief executive officer of the Associated General Contractors of America regarding the Senate’s approval of a multi-year highway/transit bill:

“On behalf of the 31 national associations and construction trade unions of the Transportation Construction Coalition (TCC), we applaud the Senate for passage of a multi-year surface transportation bill that would guarantee real growth in federal highway and public transportation investment over the next three years.  The Developing a Reliable and Innovative Vision for the Economy (DRIVE) Act would also assist state long-term transportation planning by distributing six years of contract authority.

“Senate Majority Leader McConnell, Environment & Public Works (EPW) Committee Chairman Inhofe and EPW Committee Ranking Member Boxer demonstrated exemplary leadership in finding the common ground necessary to earn overwhelming bipartisan support for the longest duration surface transportation bill approved by either chamber since 2005.  Furthermore, they accomplished this feat before the current short-term extension of the highway and transit programs expires.

“Today’s Senate vote on the DRIVE Act and the expected enactment of a three-month extension of the surface transportation programs by July 31 should bring to a close once and for all claims that Congress needs “more time” to develop a long-term reauthorization bill and Highway Trust Fund solution.  For more than a year members of both parties and chambers have used this rationalization for kicking the reauthorization can down the road.  The time for any further short-term extensions is over.

“We appreciate House Transportation & Infrastructure Committee Chairman Bill Shuster’s recent statement reiterating his commitment to producing a multi-year surface transportation bill soon.  Achieving this goal, however, will require House Republican leaders and the Ways & Means Committee to develop a bipartisan plan to generate the resources necessary to grow highway and public transportation investment.  This must be a priority focus over the next six weeks.

“Members of the TCC will spend the August recess making sure all House members hear from their constituents about the need for the House to pass a meaningful, long-term surface transportation bill in September to ensure a final measure can be enacted before the latest short-term extension expires.”

Highway Bill Happenings…

The House approved a three-month extension before leaving for its summer vacation. That was yesterday.

Today: Senate approves six-year highway bill.

THE HILL Reports:

The Senate passed its long-term highway bill Thursday, though their work on federal infrastructure funding isn’t over.

Senators voted 65-34 to approve the six-year bill, which funds federal highway and infrastructure projects for three years.

Democrats were split on the measure, with most of the caucus’s leadership voting against the bill negotiated by Majority Leader Mitch McConnell (R-Ky.) and Sen. Barbara Boxer (D-Calif.).

Fifteen Republican senators, including three 2016 presidential candidates, bucked McConnell and voted against the proposal.

The legislation also faces an uncertain future with the House, which has committed to passing its own long-term highway bill after the August recess.

In the meantime, the House has approved a three-month stopgap measure that the Senate is expected to approve later on Thursday.

That legislation also addresses a budget shortfall at the Department of Veterans Affairs.

McConnell on Thursday cast the short-term measure as buying time for the House to put together its own long-term highway bill.

“The multi-year nature of this legislation is one of its most critical components. It’s also something the House and Senate are now united on,” he said. “We all want the House to have the space it needs to develop its own bill, because we all want to work out the best possible legislation … in conference.”

Another hurdle for the bill with the House is that it would extend the Export-Import Bank for five years. Conservatives in the lower chamber want to prevent the bank’s charter from being renewed.

The legislation would be used to pay for about $47 billion of funding for the Department of Transportation’s Highway Trust Fund. That funding accounts for only the first three years of the legislation. Under the Senate bill, senators would have to determine by 2018 how to pay for the full six years.

In an effort to keep McConnell’s pledge to not increase the gas tax, the Senate’s bill includes a package of payfors including revenue from reducing interest rates paid by the Federal Reserve to large banks and selling oil from the Strategic Petroleum Reserve, normally used to prevent energy crises.

But there’s more…

Senate sends three-month highway bill to Obama

The Senate on Thursday approved an $8 billion extension of federal transportation funding, sending it to President Obama’s desk with just one day to go before the nation’s road and transit spending expires.

The bill, which extends infrastructure spending until Oct. 29, passed in a 914 vote, pushing the debate into the fall.

Obama, who has advocated for long-term extension of highway funding, is expected to sign the patch to prevent an interruption in funding during the busy summer construction season.

The vote Thursday came after the Senate passed its preferred fix, a six-year highway bill negotiated by Senate Majority Leader Mitch McConnell (R-Ky.) and Sen. Barbara Boxer (D-Calif.).

House Republicans refused to take up that bill and left town on Wednesday, forcing the Senate to accept the three-month stopgap.

Republican leaders in the Senate sought to downplay the squabbling between the chambers as they punted the highway debate to the fall.

“We all want the House to have the space to develop its own bill, because we all want to work out the best possible legislation for the American people in a conference later this year, “McConnell said ahead of the vote.

McConnell touted the earlier vote to approve three years of funding as a victory.

“Many thought we’d never get there, but we have indeed,” he said, saying the Senate’s long-term highway bill “doesn’t raises taxes by a penny.”

“This is more than just another accomplishment for the Senate. It’s a win for our country because the bill would cut red tape and streamline regulation. It would modernize infrastructure and advance research and innovation,” McConnell said.

Democrats in the Senate complained about the House’s rejection of its long-term highway bill even as the chamber approved the temporary patch.

“This has been a long and winding road to get the point where we can pass a transportation bill that is a very good bill, that is very bipartisan,” said Boxer, who is retiring from the Senate in 2017.

“This person says, ‘I don’t like the process.’ And this one says, ‘I don’t like the pay-fors,’ ” Boxer continued. “But we know if we run into a construction worker who is unemployed and we say, ‘Well, we didn’t vote for this because we didn’t like the process,’ he would say, or she would say, ‘I need a paycheck.’ ”

The fight over road funding has cut across both parties, with Senate and House Republicans pitted against one another when it comes the idea — pushed strongly by Rep. Paul Ryan (R-Wis.) — of trying to negotiate a highway bill paid for by tax reform.

House Republicans earlier this month approved a five-month extension of highway funding, seeking to buy time for negotiations with the White House over a long-term bill that would be paid for with changes to tax policy.

But rather than take up the five-month bill, McConnell quickly brought his long-term plan to the floor over the objections of Democrats who complained they did not have enough time to read the measure.

Republicans leaders in the Senate predicted the House would be amenable to their long-term bill once lawmakers return from their summer recess.

“I think the House will end up taking up our bill,” Sen. James Inhofe (R-Okla.), chairman of the Environment and Public Works Committee, predicted ahead of the Thursday votes.

“In fact, I think a lot of the staff people are working on that right now over on the side,” he continued.

Inhofe said it was important for the Senate to have also passed the long-term bill to “encourage” the House to act.

“If we don’t pass the DRIVE [Developing Roadway Infrastructure for a Vibrant Economy] Act out of this chamber, then [what] we’re doing is reinforcing current law,” he said. “What is current law? Current law is short-term extensions.”

Congress is grappling with a funding shortfall for transportation that is estimated to be around $16 billion per year. Since 2005, lawmakers have not passed a transportation bill that lasted longer than two years.

Passage of the three-month highway bill means that the Export-Import Bank’s charter will remain expired through the August recess. The three-month bill sent to Obama on Thursday does not include language on Ex-Im.

Aside from the highway extension, the temporary patch includes a provision allowing the Veterans Affairs Department to shift $3 billion within the agency to shore up a budget shortfall so hospitals and other facilities don’t close in August, aides said.

The legislation also would ensure that veterans with service-related disabilities are able to use health saving accounts.

Bottomline: Highway Bill Patch Number 34 is in place until October 29, 2015. Between now and then the House has a to accept, reject, modify or refine the Senate’s 6-year proposed bill.