Nonresidential Fixed Investment in Structures Expands 4.6 Percent

Nonresidential fixed investment in structures expanded 4.6 percent on an annualized basis during the second quarter of 2013, according to the July 31 gross domestic product (GDP) report by the U.S. Commerce Department. This increase followed a 4.6 percent decline in the first quarter of the year.

Fixed investment in equipment rose 4.1 percent in the second quarter and overall investment in structures expanded 6.8 percent. Residential fixed investment increased 13.4 percent following 12.5 percent expansion in the first quarter. Fixed investment in the nation’s residential sector has been growing at a double-digit clip since the third quarter of 2012.

Federal government expenditures declined 1.5 percent during the second quarter primarily due to a 3.2 percent drop in non-defense spending. Meanwhile, national defense spending dropped 0.5 percent. State and local government spending rebounded mildly, growing only 0.3 percent during the second quarter following three consecutive quarters of declines.

In total, real GDP expanded 1.7 percent during the second quarter following a revised 1.1 increase in the first quarter of the year.

“There was nothing particularly shocking in today’s GDP report,” said Anirban Basu, the chief economist for the Associated Builders and Contractors (ABC). “As predicted, the economy expanded less than two percent during the second quarter, though many predicted today’s GDP growth estimate would be below one percent.

“Today’s report also indicates ongoing and gradual recovery in nonresidential investment,” said Basu. “Investment in nonresidential structures expanded 4.6 percent during the second quarter, essentially offsetting the decline in activity registered during the first quarter.”

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