ABC: Decline in Structure Investments Continues

The U.S. economy grew in the fourth quarter, but investment in nonresidential structures decreased at an annual rate of 11.4%.
Construction materials costs prices january 2022

An Associated Builders and Contractors analysis of data released by the Bureau of Economic Analysis shows investment in nonresidential structures decreased at an annual rate of 11.4% in the fourth quarter of 2021 and has now contracted in eight of the past nine quarters.

The continued slowdown juxtaposed BEA’s announcement stating the U.S. economy grew at a 6.9% annualized rate in the fourth quarter of last year.

While the economy expanded 5.7% in 2021 — the fastest rate since 1984 — investment in structures declined 8.2% for the year after contracting 12.5% in 2020, according to the analysis.

“Commercial real estate is among the most compromised segments of the economy,” said ABC Chief Economist Anirban Basu. “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.”

Retail bankruptcies occurred in 2020 in part because of the “dramatic move toward e-commerce” contributed to increased store closures and vacant retail spaces, Basu said.

“That has further reduced demand for commercial construction services,” he said.

 

 

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