The U.S. economy grew at a 6.9% annualized rate in the fourth quarter of 2021, according to an Associated Builders and Contractors analysis of data released by the U.S. Bureau of Economic Analysis. Investment in nonresidential structures decreased at an annual rate of 11.4% for the quarter and has now contracted in eight of the past nine quarters.
The U.S. economy expanded 5.7% in 2021, the fastest rate of growth since 1984. Investment in structures declined 8.2% in 2021 after contracting 12.5% in 2020.
“Commercial real estate is among the most compromised segments of the economy,” says Anirban Basu, chief economist for ABC. “The pandemic has profoundly shifted behavior. Remote work is far more common, and a greater fraction of business is being conducted via Zoom or other virtual platforms. The result has been higher office vacancy and reduced hotel occupancy. Neither is good for demand for construction.
“However, nonresidential investment has increased in certain segments,” Basu says. “Among the most obvious are development of data and fulfillment centers, backbones of the ecommerce economy. That said, health care and industrial construction should emerge as other sources of expanding demand for construction services during the coming months. This could help maintain contractor confidence, which continues to improve, according to ABC’s Contractor Confidence Index.”
Visit abc.org/economics for the Construction Backlog Indicator and Construction Confidence Index, plus analysis of spending, employment, GDP and the Producer Price Index.
