Tag Archive for 'US GDP'

ABC Reports : Nonresidential Construction Down in March, Says ABC Private Sector Falters, Public Sector Unchanged

Nonresidential construction spending declined 0.3 percent in March, according to an Associated Builders and Contractors (ABC) analysis of U.S. Census Bureau data released today. Nonresidential spending, which totaled $740.9 billion on a seasonally adjusted, annualized basis, has expanded 2.5 percent on a year-over-year basis. February’s spending estimate was revised roughly $10 billion higher, from $732.8 billion to $742.8 billion, rendering the March decline less meaningful.

Private sector nonresidential construction spending fell 0.4 percent on a monthly basis but rose 2.2 percent from a year ago. Public sector nonresidential spending remained unchanged in March, but it is up 2.9 percent year-over-year.

“The nonresidential construction spending data emerging from the Census Bureau continue to be a bit at odds with other data characterizing growth in the level of activity,” said ABC’s Chief Economist Anirban Basu. “For instance, first quarter GDP data indicated brisk expansion in nonresidential investment. Data from ABC’s Construction Backlog Indicator, the Architecture Billings Index and other leading industry indicators have also been suggesting ongoing growth. Despite that, private nonresidential construction spending is up by roughly the inflation rate, indicating that the volume of services delivered over the past year has not expanded in real terms.

“That said, most economists who follow the industry presumed that March data would be somewhat soft,” said Basu. “The Northeast and Midwest were impacted by unusually persistent storm activity in March. The same phenomenon impacted March’s employment estimates, which indicated that construction actually lost 15,000 jobs that month. Other weather-sensitive industries, including retail trade, also experienced slow to negative job growth in March.

“The upshot is that CEOs and other construction leaders should remain upbeat regarding near-term prospects despite today’s construction spending report,” said Basu. “Leading indicators, including a host of confidence measures, collectively suggest that business investment will be on the rise during the months ahead. Improved state and local government finances should also support additional nonresidential construction activity.

“At the same time, construction industry leaders must remain wary of a sea of emerging risks to the ongoing economic and construction industry expansions,” said Basu. “Interest rates are on the rise. Materials prices, including those associated with softwood lumber, steel, and aluminum, are expanding briskly. Wage pressures continue to build. There are also issues related to America’s expanding national debt, increasingly volatile financial markets, the geopolitical uncertainty that has helped to propel fuel prices higher, and lack of transparency regarding America’s infrastructure investment intentions. The challenge for construction CEOs and others, therefore, is to prepare for growing activity in the near-term, but for something potentially rather different two to three years from now.”

Tom Ewing’s Environmental Update

*  Well, this is a bit awkward!  EPA’s Office of Inspector General (OIG) reports that in 2015 and 2016 EPA paid over $1.5 million for subsidized and unoccupied parking spaces at DC headquarters and Region 4 Atlanta, the only two offices that subsidize parking.  These weren’t criticisms for employees who needed to park, either.  (Other EPA offices provide “free” parking but the OIG report doesn’t include that non-cash benefit.)  The OIG points out that a 2015 Executive Order established “a clear overarching objective of reducing greenhouse gas emissions across Federal operations” encouraging agencies to “promote sustainable commuting.”  OIG found sloppy program accounting, too, with good-role-model parents apparently using their kids to qualify for car-pool spaces, which were granted even though car-pool participants didn’t list an email address on application forms, as required.  Tsk tsk… Do as we say, not as we do!
*  Someone named V V makes some thoughtful points about regulatory costs in comments to a Federal Highway docket.  V V has an interesting angle, first noting that the US GDP is around $17.6 trillion.  Then, he/she cites recent estimates that regulations cost the US economy about $1.88 trillion.  Next, some comparative figures: $2 trillion (rounding up a bit) is equivalent to more than half the 2014 level of fiscal budget outlays ($3.5 trillion), and nearly four times the $482 billion deficit.  Regulatory costs rival the level of pre-tax corporate profits, which were $2.235 trillion in 2013.  US households “pay” $14,976 annually in hidden regulatory tax ($1.882 trillion in regulation 125.67 million “consumer units”), “equivalent” to 23% of average income before taxes.  If US regulatory costs of $1.88 trillion were a “country”, it would be the world’s tenth largest economy, between India and the Russian Federation.  Hey, V V – thanks!  Happy Monday, Dude *:)) laughing!

*  EPA has a public hearing scheduled to take comments on the “Repeal of Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units,” a.k.a., ending the Clean Power Plan.  Okay, public hearings aren’t anything new, but this meeting won’t be held in boring ol’ Washington DC or Arlington or Alexandria with the usual bunch of over-paid suits milling around checking their phones.  No sir, this meeting will be held in wild wonderful West Virginia, right in the heart of coal country.  Wow, passion and policy wonks in the same room at the same time.  Should be fun.

Tom Ewing
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