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- Construction spending kicked higher in April to its highest level in over 6 years. Everything real estate is coming alive. More gains are in the cards for later in the year since home construction will no doubt increase from the shortage of housing inventory. Commercial real estate construction is also needed since vacancy rates across all property types have been inching down.
- Specifically, the total construction spending dollars rose for the third consecutive month and is now higher by 4.8 percent from one year before. Moreover, it crossed the $1 trillion (on an annualized basis) for the first time since 2008.
- The recovery has been primarily in the private construction sector. Spending for public construction projects has not recovered, attesting to careful budget spending plans at all levels of the government. Of the public spending, spending for highways and streets are rising. But spending for public water supply plants are not. With the news of droughts and floods becoming more common, the lack of spending for water treatment plants is discomforting.
- With housing inventory very low – few homes for sale and falling rental vacancy rate – housing starts will be rising meaningfully over the next few years. This trend nearly assures greater construction spending in the months ahead and more hiring of construction workers.
- Too small to be in national statistics, it is unclear what new construction is being done related to housing people with mental illness. This past month, economists and society lost a “beautiful mind” of Professor John Nash, whose life brought topic of mental illness to the general public via the Oscar-winning movie. Another brilliant mind who likely had undiagnosed similar illness was Jonathan Swift, the author of Gulliver’s Travels. His contemporaries thought him as the worst possible misanthrope who hated life and human beings. With no friends but some financial success from writing, his will revealed all his money going towards building homes for the mentally ill. A beautiful final act from another person with a beautiful mind.
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