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ConstructConnect Resources

Construction Economic News

Stay up to date on the latest construction economic news and get in-depth analysis and insights from Chief Economist Alex Carrick and Senior Economist Michael Guckes.

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A strange thing is happening with the U.S. foreign trade balance. It’s improving significantly. It’s no longer as steeply in the hole as it was. And why this is so unusual is because it’s occurring while the value of the U.S. dollar is rising, making imports cheaper and more attractive and rendering exports more expensive and, therefore, a harder sell.

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While the business cycle impacts virtually all businesses, the timing of its impact can vary between industries. In my past work as a Chief Economist in the manufacturing sector, I carefully studied and wrote about the manufacturing business cycle between 2017 and early 2022. During this time—and as in prior business cycles—it was very clear that changes in new orders for manufactured products led all other components of manufacturing activity.

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There are aspects to the current inflation problem that deserve an airing. First, while the U.S. all-items CPI-U increase, often referred to as the headline rate, is +8.3% y/y and the core rate, which leaves out price-volatile food and energy items, is +6.3% y/y, there is another measure that isn’t nearly as extreme.

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Large U.S. domestic banks at the start of September 2022 had $1.46 trillion* in commercial and industrial loans outstanding; representing an 18% increase from a year ago. This marks the fastest expansion in C&I loans from the large banks category since 2008.

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In the United States, the Federal Reserve has just raised its key policy-setting interest rate, the federal funds rate, into a range from 3.00% to 3.25%. The intent is to cool inflation, which is +8.3% year over year for the Consumer Price Index (i.e., CPI-U, with U standing for urban consumers). The U.S.  core inflation rate is +6.3%. Core leaves out price-volatile energy and food items.

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There will be a lot riding on the hoped-for success of the U.S. manufacturing sector over the decade-plus ahead if the goals concerning carbon emission reductions by mid-century are to be met. There will need to be tremendously large investments in electric vehicle production line expansions, new EV battery plants, computer chipmaking operations, and in the fabrication of all the building products that will go into renewable electricity generation, utility-sized power storage units, coast-to-coast recharging stations, new hydrogen extraction facilities, and so on.

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Much has been made of the efforts by the U.S. Federal Reserve Bank to raise interest rates in order to cool down price inflation without also sending the overall economy into a recession. Achieving this feat will be a considerable task as it requires the right balance of slowing down the various elements of total economic activity, as measured by Gross Domestic Product without sending it into reverse.

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The accompanying table records the top 10 project starts in the United States for August 2022.

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Clichés are often true and it is the case that a picture can be worth a thousand words.

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August Found July To Be Hard Act To Follow ConstructConnect announced today that August 2022’s volume of construction starts, excluding residential work, was $40.0 billion, a decrease of -26.3% compared with July’s figure of $54.3 billion (originally reported as $53.7 billion).

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