Wednesday, July 1, 2009

Construction Spending Released Today

Today the Census Bureau revised its estimates of construction spending January 2007-April 2009. The revision says that more of the INCREASE in non-residential construction spending occurred during 2007 than occurred in 2008 (to see the time series prior to the revision, see here). Still, non-residential construction is higher now than it was when the recession began.

Today the Census Bureau also released an estimate of May 2009 construction spending. Residential spending continued to fall. Private non-residential spending increased, but little.

I have noted that construction could bottom out and recover without a rise in private construction, because the private activity would be crowded out by public spending. However, the public spending fell too.

Housing prices would likely stop falling, and begin to rise, before construction spending recovered because prices can adjust more quickly. Nevertheless, a housing recovery cannot be declared until residential construction spending stops falling.

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