Monday, May 4, 2009

Non-residential Construction Remains Higher than It was When The Recession Began

True, but rarely acknowledged:

However, residential construction spending was down in March (for the 24th consecutive month), which is not particularly supportive of my hypothesis that housing hit bottom in early 2009.

We need to consider that public construction spending (which is almost exclusively non-residential) rose, and will continue to rise this year. Greater public construction will be a force reducing private construction, perhaps especially private residential construction. Thus, thanks to the stimulus package's crowding out effects, the housing recovery may be more in the form of higher housing prices rather than more housing construction.

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