- Posted September 05, 2011
- Tweet This | Share on Facebook
Construction spending down 1.3 percent in July
By Martin Crutsinger
AP Economics Writer
WASHINGTON (AP) -- Builders cut back on spending by the largest amount in six months in July with sharp reductions in outlays for government building projects.
Construction spending fell 1.3 percent to a seasonally adjusted annual rate of $789.5 billion, the Commerce Department reported last Thursday. That is 3.5 percent above an 11-year low hit in March but it is still only about half the $1.5 trillion that economists view as a healthy level for construction. Economists believe it could take four years before construction activity returns to more normal levels.
The weakness in July reflected a 2.1 percent drop in spending on government building projects, which fell to the slowest pace since late 2006.
Spending on residential construction fell 1.4 percent, reflecting a big drop in spending on home improvement projects. Spending on new homes and apartments showed small increases with total residential construction standing at an annual rate of $248.1 billion.
The 0.4 percent drop in non-residential spending, to an annual rate of $266.4 billion, reflected declines in spending on hotels, recreation facilities and factories.
The 2.1 percent drop in spending for government projects pushed this sector down to an annual rate of $275 billion, the lowest level since late 2006. State and local governments have been forced to cut back because of severe budget problems while the federal government has come under pressure from a drive to get control of soaring budget deficits.
Housing has been a drag on the economy and is a key reason the economy has struggled to recover two years after the recession officially ended. Home sales are on pace this year to be the worst in 14 years.
High unemployment, larger down payment requirements and tighter credit are preventing many buyers from entering the market. Many who can afford to buy are waiting because they are worried prices have yet to hit bottom.
Economists believe home prices will fall further once banks resume millions of foreclosures, which have been delayed because of a government investigation into mortgage lending practices. If the U.S. economy slips back into another recession, prices could drop even further.
The pace of sales for previously occupied homes is trailing last year's 4.91 million sold, the fewest since 1997. In a healthy economy, people buy roughly 6 million homes each year.
Sales of new homes dropped in July for third straight month. This year is shaping up to be the worst for sales of new homes on records dating back to 1963.
Published: Mon, Sep 5, 2011
headlines Oakland County
- Associations gather for Spring Fling
- Law school’s team wins William and Mary Colonial Cup Competition
- Supreme Court makes it easier to sue for job discrimination over forced transfers
- Oakland County Physician bound over on insurance fraud charges
- Innocence Project leaders present at University of Pennsylvania Carey Law School Spring Symposium
headlines National
- Incarceration series includes female inmates but doesn’t tell full story
- ACLU and BigLaw firm use ‘Orange is the New Black’ in hashtag effort to promote NY jail reform
- Former DOJ official who alleged election fraud violated at least one ethics rule, ethics committee says
- Winston & Strawn will provide reduced-cost legal services for routine tasks under Winston Legal Solutions umbrella
- Should Justice Sotomayor retire? Chemerinsky, White House haven’t joined calls for her to step down
- Which BigLaw firms are increasing lateral associate hiring the most? One made legal headlines last year