Seasonal adjustment methodology of US Census continues to support headlines which do not accurately portray the true state of construction spending.
The U.S. Census Bureau of the Department of Commerce announced today that construction spending during March 2011 was estimated at a seasonally adjusted annual rate of $768.9 billion, 1.4 percent (±1.6%)* above the revised February estimate of $758.6 billion. The March figure is 6.7 percent (±1.8%) below the March 2010 estimate of $824.0 billion.
During the first 3 months of this year, construction spending amounted to $161.2 billion, 7.8 percent (±1.4%) below the $174.8 billion for the same period in 2010.
The headline should be “Construction Spending Down 7.4% Although Less Bad”. The truth is that construction spending (construction put in place) decline is less bad roughly following a long term trend line. To use some physics analogies:
- The value of construction spending is lower. (Position)
- The change in construction spending is negative (going lower). (Velocity)
- The rate of change is positive (going lower more slowly). (Acceleration/Deceleration)
Private spending is down 11% year to date, while public sector spending is down 1.5% year to date. What happens as the year progresses and the states and federal government continue to pull back spending to support deficit reduction?
Construction spending will be one of the more interesting data sets to watch going forward to see if private sector spending can overcome the government cutbacks.
Construction Spending Downward Spiral Continues in February 2011 by Steven Hansen
Yup – Construction Spending Has Almost Fallen off the Chart by Steven Hansen