This Is The Worst Year For US Construction Spending Since 2010

US Construction Spending inched higher in August (+0.5% MoM) from a downwardly revised 1.2% MoM plunge in July.

Despite the modest uptick, 2017 remains the worst year for Construction Spending growth since 2010...

"Recovery?"

Comments

Paul Kersey Cash2Riches Mon, 10/02/2017 - 11:46 Permalink

Those construction numbers don't account for the massive spending on home renovations. Home Depot is killing it:

"Home Depot reported earnings of $2.25 a share, compared with a forecast profit of $2.22 per share.

Revenue was $28.11 billion versus an estimate of $27.84 billion.

Same-store sales climbed 6.3 percent, better than the expected 4.9 percent growth."

Folks aren't selling their houses and buying new ones. They are renovating their homes and staying in place. HGTV could be hurting new home builders like Amazon is hurting stick and brick shopping malls. There is a new kind of economy, and some of the biggest players of the old economy will either have to reinvent themselves, or they will be cut out altogether. And, by the way, after two major hurricanes and lumber prices up over 40% in two year, building new houses will just become too expensive for most folks to afford.

You know what they say about divorce, "sometimes it's just cheaper to keep her". Well, the same could be said about divorcing our old houses.

In reply to by Cash2Riches

Mr. Class and … Paul Kersey Mon, 10/02/2017 - 12:24 Permalink

New homes are shit anyway. Who wants to live in a cookie cutter neighborhood, where every house looks identical, in a boring subdivision? Sure, everything is new and shiny, but there's no character and no redeeming value. You go to sell your house and there's probably 2 other identical ones on the market at the same time causing downward pressure on your price.Also, maybe people are realizing the American dream of home ownership, 1.5 children, a dog, and 2 cars in the garage is bullshit. Renting is still throwing money away, but still smarter for people who are constantly moving, trying to chase down good work.

In reply to by Paul Kersey

swmnguy Mr. Class and … Mon, 10/02/2017 - 12:51 Permalink

Not to mention, in many areas (including where I live) almost all the new construction is miles away from where one needs to go to work, school, shopping, running errands etc., and is only accessible by car.  For me and my family, it makes far more sense to buy the house in the city near all the things we need.  If our time has any value, besides the actual money saved not having to commute an hour each direction each day, the higher price of the home and property taxes and services etc. is easily worth it.

In reply to by Mr. Class and …

Mr. Class and … swmnguy Mon, 10/02/2017 - 16:26 Permalink

I'm really lucky, living in a city of just under 200k in the midwest, I rent (for now) in an older subdivision that's less than 10 minutes from my job. Traffic isn't terrible around here and it's not overrun with crime. But I see the new construction going up and it's so bizarre. These super cheap houses that are fairly decent for what they are, but the neighborhoods are barren; no grass or trees and every house a carbon copy of the next.

In reply to by swmnguy

Hal n back Paul Kersey Mon, 10/02/2017 - 12:26 Permalink

A lot of that increse at HD and LOW costs from inflation thats improvemements.eg, applances--with all the  leds lights there somehow a refridgerator costs 3k or more.All that applicance does s keep your food cool or frozen, just like it id 1-40 years ago. How much more for decorators appliaces that still only last 7-10 years (vs the 20 years a wisher dryer, frefridgerator, Microwave and dishwasher cost.not to mention on these new electrical applicances , if they need a new motherboard its $350.A lot of this is imported--made with cheap lablor and automation. its all bs and a part why 90% of the population is fucked and another 8% is just screwed.Light bulbs in general. A simple bulb used to cast 20 cents--now more than a few dollars-but they will last 10 years, or will they.

In reply to by Paul Kersey

True Blue Paul Kersey Mon, 10/02/2017 - 14:45 Permalink

So, given a 6.3% yoy growth, with lumber prices inflating by %20+ over the same time period; it looks as if actual volume is down by ~13.7% which reflects the overall housing industry chart above pretty well. You cannot calculate 'growth' without subtracting the loss in inflation.Even in the chart, this makes for a factual error, as inflation isn't factored in; so with spending at -.26% with inflation properly accounted in, the loss is somewhat more staggering. How staggering? Nobody can really tell, but using 'official' inflation of what 1.9%? the loss is more like 2.16% yoy and in reality probably closer to 7 or 8 %.

In reply to by Paul Kersey

junction Iconoclast421 Mon, 10/02/2017 - 13:07 Permalink

I don't know about the rest of the country but in Manhattan there is a tremendous construction boom as builders put up high rises one after another, taking advantage of the city's corrupt City Planning Board that is paid off to give zoning variances.  Traffic over the free bridges to Manhattan is jammed with contractor vehicles.  What happens when the stock market implodes is anyone's guess.

In reply to by Iconoclast421

lasvegaspersona junction Mon, 10/02/2017 - 14:01 Permalink

Here is a hint...when 2008 and Lehman hit construction in Las Vegas just died. Lehman was the money behind the malinvestment. Only in the past year or 2 have some of those projects been revived. Many were just torn down or overgrown.Still the craziness continues now however as Malls with 50% OCCUPANCY ARE DOUBLING THEIR CAPACITY. I'm probably too old to understand this new economy.

In reply to by junction

deja junction Mon, 10/02/2017 - 15:38 Permalink

All you can see are cranes all over the city, especially down by Hudson Yards.  Do they really think they can sell/fill those thousands of new luxury apartments?  It was Bloomberg's gift to his pals in real estate along with the 7 train extension and new station at 34th and 12th.  Too bad the rest of the line is rotting away.

In reply to by junction

LawsofPhysics Mon, 10/02/2017 - 11:19 Permalink

With more and more of the country's GDP becoming nothing more than useless paper/digit pushing by overcompensated middlemen, this should come as no surprise to anyone."Full Faith and Credit"

GoldHermit Mon, 10/02/2017 - 11:35 Permalink

Fudged numbers from the government desperate to hide the real picture.  it can only go on so long until the curtain is pulled back showing a naked emperor.

roadhazard Mon, 10/02/2017 - 12:49 Permalink

Just as soon as corporate taxes are lowered and off shore money is allowed back in the US with little or no taxes everything will be fine... really.