Want to know if the economy is really recovering? If an economy is truly growing then it leads to a demand for construction. As demand on businesses exceed their current capacity they build or expand facilities. As the economy strengthens so does employment. Increases in employment ultimately leads to residential construction as renters turn into owners and new entrants into the job market become new renters. As demand increases so does the demand for construction for more houses, buildings, plants, infrastructure, etc.
Today’s release of the construction spending numbers. Construction outlays were weaker than expected and broad based. The one bright spot was multifamily (apartment) construction as more Americans are forced out of their homes due to default, delinquency and foreclosure. Construction spending fell 1.1 percent in February, following a massive revision of a negative 0.8 percent for January (originally down 0.1 percent).
Not surprisingly the mainstream economists were all shocked by these numbers as their median market forecast called for a 0.7 percent increase.
The decrease in February was led by a 1.7 percent drop in public construction withprivate nonresidential decreasing 1.6 percent. For those expecting a housing recovery there was no good news in this report either as new one-family outlays fell 1.5 percent.
Of course, this report is a subtraction from GDP and will lead to revisions in the Q1 estimates. We are still holding our call to 1.5 to 2% growth in Q1 which will turn out an unprecedented four quarters of sub-2% GDP growth without being in a recession. However, according to Rasmussen’s recent survey – 60% of Americans believe we are in a recession already.
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About The Author
Lance Roberts – Host of Streettalk Live
After having been in the investing world for more than 25 years from private banking and investment management to private and venture capital; Lance has pretty much “been there and done that” at one point or another. His common sense approach has appealed to audiences for over a decade and continues to grow each and every week.
Lance is also the Chief Editor of the X-Report, a weekly subscriber based-newsletter that is distributed nationwide. The newsletter covers economic, political and market topics as they relate to the management portfolios. A daily financial blog, audio and video’s also keep members informed of the day’s events and how it impacts your money.
Lance’s investment strategies and knowledge have been featured on Fox 26, CNBC, Fox Business News and Fox News. He has been quoted by a litany of publications from the Wall Street Journal, Reuters, The Washington Post all the way to TheStreet.com as well as on several of the nation’s biggest financial blogs such as the Pragmatic Capitalist, Zero Hedge and Seeking Alpha.