Private construction spending beats public spending in 2017
- In an analysis of the U.S. Census Bureau's November construction spending data, the Tribune-Review reported that private construction spending for the first 11 months of 2017 outpaced that of public construction.
- Private-sector spending from January to November increased to $878.6 billion, up 6.5% from the same period in 2016. That growth was driven by the residential sector, which increased 11.5%, and nonresidential, which was up 1.1%.
- Public construction spending fell 2.8% to $259.7 billion in the first 11 months of the year as compared with the January-to-November period in 2016. That figure included a 3.2% dip in public housing projects and a 2.8% decrease in nonresidential projects like public infrastructure.
Analyzing only the nonresidential component of the Census Bureau's November report, the Associated Builders and Contractors reported that private nonresidential construction spending fell 3.1% from November 2016 while public sector nonresidential spending increased during that same period of time.
Anirban Basu, ABC's chief economist, said that lender perception of overbuilding in some larger metros could be constraining the private sector, particularly when it comes to hotel, office and other commercial segments. Basu added that the increase in the private residential market has expanded the tax base, providing more money for public projects, helping that sector's performance.
According to the Census Bureau, transportation spending has increased nearly 14% since November of last year, and that trend is likely to continue given the large infrastructure programs some states kicked off in 2017. California introduced the largest initiative, pegged at $52 billion. The state increased its gas tax and other user fees to finance the work, which will include repairs to its highway and other transportation systems. California estimated its repair backlog at $59 billion.
Another initiator of transportation spending could be the $1 trillion infrastructure plan President Donald Trump is expected to unveil this month. In his budget proposal, the president indicated that a $200 billion contribution from the federal government could spur enough private investment to cover the remaining $800 billion.
- Tribune-Review U.S. had more private, less public construction in 2017
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