Fixed investment in nonresidential structures and intellectual property grew 12.3 percent and 2.2 percent, respectively, in the third quarter, according to an analysis of data released by the U.S. Commerce Department by Associated Builders and Contractors (ABC). However, the group reports that the growth was tempered by a 3.3-percent decline in fixed investment in nonresidential equipment.
“Today’s GDP release represents the last piece of information regarding U.S. output and nonresidential fixed investment that is untouched by the federal government shutdown in October and the most recent debt ceiling debate,” says ABC chief economist Anirban Basu. “Of course, September economic activity could have been impacted by rising uncertainty as the first October budgetary deadline approached.”
Real GDP expanded 2.8 percent on a seasonally adjusted annual rate during the third quarter, following a 2.5 percent increase in the first quarter. Nonresidential fixed investment grew 1.6 percent, while residential fixed investment increased 14.6 percent in the third quarter, according to the report.
“The third quarter also was impacted by a slew of other headwinds, including rising interest rates,” Basu says. “Fourth quarter GDP will not be much better, and could be worse due to interruptions in federal operations and an associated decline in consumer confidence.
“Because the latest budget deal only keeps the federal government open until January 15 and only raises the debt ceiling through February 7, construction industry stakeholders may need to wait until the spring for decision-makers to have enough confidence to allow for a reacceleration of natural economic growth,” Basu adds.