Dive Brief:
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Private construction’s contribution to the U.S. economy declined by more than 40% between 1997 and 2014, the Associated Builders and Contractors reported on Tuesday.
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Construction as a percentage of real national gross domestic product (GDP) fell from a high of 6.17% in 1997 to a low of 3.66% in 2014. The 2014 number — the latest one available — dipped from 3.77% in 2012 and 2013, when construction activity had increased.
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Particularly hard hit were Delaware, Connecticut, New York, California and Michigan, but nearly half of U.S. states fell below the national average. The Top 5 states for construction as a percentage of GDP in 2014 were North Dakota — helped along by a construction boom fueled by the energy economy — as well as Louisiana, Hawaii, Montana and Utah.
Dive Insight:
A decline in construction affects the U.S. economy beyond what these numbers reveal, according to Bernard M. Markstein, the study’s author.
When construction activity falters, so do the manufacturing and sale of construction-related products, like furniture and appliances for offices and homes. Those additional purchases, Markstein wrote in an executive summary of the report, add up to 3% to the impact of the construction industry on the economy.
And the data show that 2014 was an especially “difficult year” for construction — even more so than forecasters had expected, Markstein wrote. Even a few “bright spots” around the country could not keep the industry’s value to the GDP from falling.
Still, he said, 2015 is shaping up to be better for the sector, which is likely to benefit from an improving overall U.S. economy.