Monday, November 2, 2009

Construction spending update

This is old news (latest data released today covered September), but it highlights again the likelihood that residential construction spending has hit bottom. Meanwhile, nonresidential construction continues to be soft. I imagine we'll see this pattern persist for some time, with strength in residential offsetting weak in the nonresidential area. What it will amount to is a huge, multi-year shift in the economy's resources away from nonresidential construction and back to residential construction. The current pace of residential construction is much less than what is required to meet a growing population; sooner or later, the excess inventory of homes—now declining—will collide with growing numbers of households look for homes, and the result will be a significant increase in residential spending.

1 comment:

Dave Jackson said...

Thanks for the updates and i hope that the construction spending will grow gradually and not sarcastically.

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