Another Recession(Depression) Warning Signal——The Construction Spending ‘Recovery’ Has Abruptly Stalled

Tuesday, August 2, 2016
By Paul Martin

by Jeffrey P. Snider
August 2, 2016

Construction spending had been increasing steadily since the start of 2011. Factoring both the size of the decline due to the housing bust and the timing of the turnaround in sales and prices, the mere fact that construction activity had been recovering was not really economically significant. As with most economic sectors, positive growth even to a substantial degree did not by itself indicate recovery. In other words, construction contributed a great deal to the cyclical confusion of the underwhelming “recovery.”

What is notable, then, is that since last September spending activity has suddenly flattened. The seasonally-adjusted annual rate (SAAR) of total construction spending was $762 billion at the end of 2014, growing to $859 billion in the nine months to last September. In the nine months since, however, spending has abruptly stagnated. The latest estimate for June 2016 was just $851 billion.

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