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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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In Difficult and Unprecedented Times Knowledge is Power The reverberating and long-run effects of the immediate actions taken by world leaders during 2020 and afterward were always going to be difficult—if not impossible—to foresee. However, 2022 is certainly the leading year in which many of the unanticipated consequences of those decisions have come to the fore.

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The Bureau of Labor Statistics released disappointing news on June 10, as it reported that overall prices increased by a record 8.6% during the 12-month period ending in May 2022. The news sent the Dow Jones Industrial Average down almost 900-points for the day. Yet this difficult news on overall inflation fails to capture an important truth which is that not all prices rise at the same time and certainly not to the same degree.

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In my recent article about non-dollar metrics, I described how the inflation-adjusted value of unfilled orders, new orders, and inventory are all at record current-day dollar amounts; yet when these readings are converted to 2019 equivalent dollars we actually see a decrease in inventories, new orders, and unfilled orders.

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I have a simple and straightforward way of rating U.S. major city labor markets. For the 51 metro statistical areas in the country with populations of more than a million, I first rank them according to year-over-year jobs growth, fastest to slowest. Second, I rank them by unemployment rate, lowest (best) to highest (worst).

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In a recent article, Construction Industry Still Facing Supply Chain & Manufacturing Issues, I explained how the dollar value of new orders and unfilled orders have grown at double-digit rates since their pre-pandemic highs. Yet, due to extreme price inflation for construction materials over the same period, these seemingly significant dollar value gains don’t represent an equal size increase in the quantity of materials being ordered.

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The latest data on construction materials and supplies suggest no stop to the supply chain and manufacturing challenges facing the construction industry. Unfilled orders, new orders, and total inventories all reached historic highs in current dollar prices in the latest data reported for April 2022.

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The angst over whether all the talk about a possible looming recession may be affecting the U.S. jobs market can be set aside, at least temporarily, based on the latest Employment Situation report from the Bureau of Labor Statistics. May’s month-to-month change in the U.S. total jobs count was +390,000. That’s a little down from the year-to-date monthly average for 2022 of +490,000, but it’s still strikingly good.

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The graphic featured below maps ConstructConnect’s type-of-structure categories for construction starts to the Census Bureau’s put-in-place designations, while also showing year-to-date results for both series through April 2022.

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The importance of retail trade for the overall U.S. economy is readily apparent. Consumer spending always accounts for about 70% of gross domestic product (GDP). In turn, retail activity is usually between 40% and 45% of consumer spending.

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If stagflation is to occur (i.e., a period of no or slow growth accompanied by high inflation), as is being projected by many prognosticators, one of its accompanying features will be a moderation in new home building activity. Neither in the United States nor in Canada has such a turn of events become evident just yet. The canary installed in stagflation’s mine shaft to warn, through an interruption in its backing vocals, of possible serious economic troubles ahead, has not yet ceased its chirping.

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