US construction spending growth has been fairly constant for two years

4 Feb 2013 by Jim Fickett.

On Friday the Census Bureau reported US construction spending through December. Although many people think the recent rise in housing starts is a strong indicator of good times ahead for the economy, it is noteworthy that total construction spending has been growing at more or less a constant rate for the last two years.

While residential construction has indeed been accelerating recently, commercial construction has stagnated after an initial pop, and public construction spending has been in decline ever since the recovery started (very much unlike previous recoveries).

So although the increase in residential construction is indeed good news, the trend for total construction spending, arguably what matters to the economy, is unchanged. I do think we are still in recovery, but I don't see any evidence that the strength of the recovery is improving.

(See the Reference page US construction spending for background and previous commentary.)