3/3 MacroEdge Weekly Report - Pinnacle of the Crane for Construction Spend?
In this weekly report - the MacroEdge team tackles the latest construction spend data, demographic data, and more - featuring special guest, CH.
Pinnacle of the Crane for Construction Spend? (@DonMiami3, MacroEdge Chief Economist)
Happy Sunday all -
Hope you enjoyed our latest edition of Ozone from John and myself, discussing some of the latest data on labor and comparisons from previous cycles that John highlighted masterfully.
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Today I will keep things shorter to let our team have the floor and provide an update on the latest construction spending data (that came out Friday). As we’ve all discussed - headwinds are mounting for continuing ‘growth’ blowouts, or the illusion of blowouts, whatever we want to call them. I am in Nevada currently and the environment is a whole lot of people spending & living like no tomorrow… This is obviously a limited sample size but I think it represents where our society is headed at large (something much more like South Africa in the future on the economic, political, cultural, and racial fronts). The demographic and economic shifts are happening much more rapidly than the political and cultural ones, but the latter will likely accelerate as the Baby Boomer generation begins passing away at a much more accelerated rate (give or take 5 years from now). While most of the solutions to these issues continue to be bandaids and temporary patches, consequences build up large enough to become inevitable for the rest of us… If you want to talk about a lag effect in consequences and can-kicking, we will be spending the remainder of our lives living them out. While I’m on the road again for this weekend and the upcoming week, I owe you all my thorough and proper deep dive looking into these more structural and lasting issues that are taking hold in the United States - and I won’t give you an unfinished product this weekend looking into just partial elements of what I want to speak on in my comparison to South Africa.
On the construction spending front - we saw a curious decline in the data released on Friday… Awsumb, Sun, and others have done a fabulous job noting the mounting headwinds for a permanent ‘construction boom!’ on the residential and manufacturing fronts. On the multifamily housing front - which we spoke on an edition of Redeye two Fridays ago - we are about to see things go off ‘Mt Everest’ once the train car begins to drop from the summit, which is where we are currently at. Active builds - although they have begun slightly contracting now - are still sitting at all-time highs. With restrictive rates, a record drop in home sales, and real demographic issues ahead - when construction goes, so the economy will, too.
Take a look at construction spending (which went neigh on parabolic with all of the fiscal injections into US construction):
