Economic News Blog
Posted by: Steven Kline, Jr. 2. February 2016

Construction Spending Growing Slower

The value of construction put in place in December 2015 was $85,903 (millions of real dollars). Compared with one year ago, spending in December was up 14.8 percent, which is a historically strong rate of growth. However, the rate of growth has decelerated the last three months. In fact, the month-over-month rate of change was is growing at its slowest rate since February 2015.

The bubble in construction spending is happening as consumers are already starting to moderate their spending, which means the revenue may not be there to support all of the construction loans. And, the Federal Reserve finally raised its overnight lending rate. But, based on the chart below, a rising 10-year treasury rate (the red line below zero - a positive number - on this chart) always leads to a significant drop in the rate of change in construction spending (althought not necessarily a contraction).

Real construction spending is a good leading indicator for construction materialshardware, and HVAC industrial production.

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