Construction spending was flat in September, and remains weak overall. Residential construction as a percent of GDP has fallen to a new all-time low of just 2.2%, so even if activity in that sector continues to slide it will have very little impact on the economy as a whole. Growth in residential construction has been a mainstay of almost all recoveries in the past, with the current recovery being the notable exception. That's one more reason why this recovery has been and is likely to continue to be disappointing.
so even if activity in that sector continues to slide it will have very little impact on the economy as a whole
ReplyDeleteDon't you wish. Residential investment subtracted 80 basis points from Q3 GDP.
Now with the downward revisions in construction spending (it is always instructive to look under the hood) Q3GDP will be revised down from 2.0% to 1.7% on that data point.
Hmmm...the second derivative in consumption exceeded the second derivative in disposable income in Q3. That's not a virtuous, sustainable cycle. Expect some blowback in Q4.
I still predict 0% GDP growth in Q4, further confirmed by the ISM Manufacturing inventory decline in October.