Fed Fixes 10 Years of Construction Data - Things Are Looking Up

January 6, 2016

On Monday, January 4, 2016, the Census Bureau revised 10 years’ worth of construction spending figures after redoing the weighting for residential improvements. The largest revisions came in the last two years and were largely upward. (Click here for an Excel file of the actual revisions)

The amount of residential construction spending that contributes to GDP varies by year, but in the third quarter of 2015 construction spending made up 6.1 percent of GDP, with residential spending accounting for 3.4 percent. The original November 2015 annual construction rate published by the US Census Bureau was $1, 1222.5 billion.

Patrick Newport, economist at IHS Global Insight, expects about $40 billion to be added to 2014 GDP, showing a growth rate of 2.6 percent rather than 2.4 percent. He also expects 2015 to come in at 2.6 percent, versus 2.4 percent that he previously estimated based on three quarters of data. First estimates for 2015 GDP will be released on Jan. 29 by BEA.

The Census Bureau's Consumer Expenditure Survey, which primarily shows how Americans spend their money, is not purposefully designed to capture residential improvement spending and does not include expenditures on rental properties.

Source: The Fiscal Times