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Issue 11
FIRST QUARTER 2015


2015 Can Still be a Fine Year
The Next Six Months Will Be Better
Coming into 2015, many economists were forecasting above 3 percent growth. In fact, some still are. Tailwinds such as a booming stock market, lower fuel prices, rapid job growth, and early evidence of sharper wage gains led forecasters to believe that 2015 was shaping up to be the best year for the economy since 2005, the last time the U.S. economy expanded more than 3 percent over the course of a calendar year (3.4%).


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2015 Can Still be a Fine Year - The Next Six Months Will Be Better 1

Joe’s View 2

Exhibit 1. Nonresidential Construction Spending, March 2010 through March 2015 - GRAPH 2

Exhibit 2. Construction Employment Growth in Twenty Largest U.S. Metropolitan Areas - CHART 3

First Quarter 2015 Performance - CHART 4


Issue 10
FOURTH QUARTER 2014


Construction Spending Carries Momentum into 2015
Last year arguably represented the best year for the U.S. economy since the Great Recession ended. GDP expanded 2.4 percent for the year, and while that fell short of the 2.5 percent growth generated in 2010, that year was associated with a significant tailwind from the stimulus package passed by Congress one year earlier. There was no federal stimulus package last year, and the economy still managed to expand moderately. According to the Bureau of Economic Analysis, real gross domestic product (GDP) expanded 2.6 percent (seasonally adjusted annual rate) during the fourth quarter, following a 5.0 percent increase during the third. Investment in nonresidential structures increased by 2.6 percent on an annualized basis.


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Construction Spending Carries Momentum into 2015 1

Joe’s View - Economic Tide is Turning 2

Exhibit 1. Nonresidential Construction Spending, December 2009 through December 2014 - GRAPH 2

Exhibit 2. Construction Employment Growth in Twenty Largest U.S. Metropolitan Areas, December 2013 v. December 2014, Not Seasonally Adjusted - CHART 3

Fourth Quarter 2014 Performance - CHART 4


Issue 9
THIRD QUARTER 2014


Momentum Starts to Build in Third Quarter
Two consecutive quarters of meaningful growth has been a rarity for the U.S. economy since the recovery began in 2009. The dominant pattern has been one of good quarter, bad quarter, good quarter, bad quarter. The third quarter of 2014 marks an end to the inconsistency. The U.S. economy expanded at a 3.5 percent pace during the third quarter of 2014 on an annualized basis. This follows an expansion of 4.6 percent annualized in the second quarter. Despite concerns pertaining to the global economy, confidence is high regarding the U.S. outlook, and continued momentum seems likely.


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Momentum Starts to Build in Third Quarter 1

Joe’s View - Luck and Opportunity 2

Exhibit 1. Nonresidential Construction Spending, September 2009 through September 2014 - GRAPH 2

Exhibit 2. Construction Employment Growth in Twenty Largest U.S. Metropolitan Areas September 2013 v. September 2014, Not Seasonally Adjusted - CHART 3

Third Quarter 2014 Performance - CHART 4


Issue 8
SECOND QUARTER 2014


Nonresidential Construction Primed for Strong Second Half in 2014
The economy appears to be back on track after a brutal winter derailed recovery efforts in the first quarter. According to the preliminary estimate from the Bureau of Economic Analysis, the U.S. economy expanded at a 4.0 percent pace during the second quarter of 2014 on an annualized basis. Robust second quarter growth was primarily driven by higher consumer and business spending as well as by an uptick in inventory investment. However, the data appear far less inspiring when one considers the first half of the year, which only saw 1 percent growth on an annualized basis. That said, the rebound from the dismal first quarter was broad-based; Federal Government spending was the only segment that contracted during the second quarter.


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Nonresidential Construction Primed for Strong Second
Half in 2014
1

Joe's View - Insights from Marcum's National Construction Industry Group Leader 2

Exhibit 1. Nonresidential Construction Spending, June 2009 through June 2014 - GRAPH 2

Exhibit 2. Construction Employment Growth in the 20 Largest US Metropolitan Areas, June 2014 v. June 2013 - CHART 3

Second Quarter 2014 Performance - CHART 4


Issue 7
FIRST QUARTER 2014


Might As Well Forecast the Weather
Any momentum garnered during the final sixth months of 2013 was stymied by the brutal winter of 2013-14. According to the preliminary estimate from the Bureau of Economic Analysis, the U.S. economy expanded at a 0.1 percent pace during the year’s initial quarter. That estimate is subject to revision and could conceivably be revised into negative territory. Thankfully, most economic indicators indicate that both consumer spending and total production have already rebounded from their sluggish first quarter pace. Unfortunately, indications of forward momentum in nonresidential construction spending have been scarcer.


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Might As Well Forecast the Weather 1

Joe’s View - Insights from Marcum’s National Construction Industry Group Leader 2

Exhibit 1. Nonresidential Construction Spending, March 2009 through March 2014 - GRAPH 2

Exhibit 2. Construction Employment Growth in the 20 Largest US Metropolitan Areas, March 2014 v. March 2013 - CHART 3

First Quarter 2014 Performance - CHART 4


Issue 6
FOURTH QUARTER 2013


Private and Public
Nonresidential Construction Recovery Remains Sporadic
The U.S. economy has now entered its sixth year of economic recovery. During the fourth quarter of 2013, the U.S. economy expanded again, this time at a 3.2 percent annualized rate. 2013 will not go down in history as a great year for the U.S. economy, and tax increases, sequestration, and a still sluggish global economy are all partially to blame for this result. That said, economic momentum developed over the course of the year and 2013's final six months were reasonably encouraging.


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Private and Public Nonresidential Construction Recovery Remains Sporadic 1

Joe's View - Insights from Marcum's National Construction Industry Group Leader 2

Exhibit 1. Nonresidential Construction Spending, March 2009 through December 2013 - GRAPH 2

Exhibit 2. Construction Employment Growth in the 20 Largest US Metropolitan Areas, December 2013 v. December 2012 - CHART 3

Fourth Quarter 2013 Performance - CHART 4


Issue 5
THIRD QUARTER 2013


Private and Public
Nonresidential Construction Continues Sluggish Growth
The U.S. economy has now entered its fifth year of economic recovery. During the recently completed third quarter, the U.S. economy expanded again, this time at a 2.8 percent annualized rate – well ahead of expectations. This GDP release, however, represents the last piece of information regarding U.S. output and nonresidential fixed investment that is untouched by the federal government shutdown in October and the most recent debt ceiling debate. Of course, September economic activity could have been impacted by rising uncertainty as the October 1st budgetary deadline approached.




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Private and Public Nonresidential Construction Continues Sluggish Growth 1

Joe's View - Insights from Marcum's National Construction Industry Group Leader 2

Exhibit 1. Nonresidential Construction Spending, March 2009 through July 2013 - GRAPH 2

Exhibit 2. Construction Employment Growth in 20 Largest US Metropolitan Areas, August 2013 v. August 2012 - CHART 3

Third Quarter 2013 Performance - CHART 4


Issue 4
SECOND QUARTER 2013


Private and Public
Nonresidential Construction Exhibits Ongoing Lack of Momentum
The U.S. economy has now entered its fifth year of economic recovery. Second quarter gross domestic product surprised to the upside, expanding 1.7 percent on an annualized basis despite many forecasts indicating that the second quarter estimate would come in at less than 1 percent. Despite a macroeconomic context associated with a booming stock market and sixteen consecutive quarters of economic expansion, nonresidential construction continues to manifest a decided lack of spending momentum.




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Private and Public Nonresidential Construction Exhibits Ongoing Lack of Momentum 1

Joe's View - Insights from Marcum's National Construction Industry Group Leader 2

Exhibit 1. Nonresidential Construction Spending, March 2009 through June 2013 - GRAPH 2

Exhibit 2. Construction Employment Growth in 20 Largest US Metropolitan Areas, March 2013 v. March 2012 - CHART 3

Second Quarter 2013 Performance - CHART 4


Issue 3
FIRST QUARTER 2013


Nonresidential Construction
Recovery Restrained by Public Funding
The U.S. economy outperformed expectations during the first quarter, led by a combination of rising stock prices and household wealth, an improving housing market, steady auto sales and engaged consumers. Admittedly, expectations coming into the quarter were low given increased taxes and what turned out to be legitimate concerns regarding sequestration. According to preliminary estimates, the economy expanded 2.5 percent on an annualized basis during 2013's initial three months, much better than the 0.4 percent annualized growth posted during 2012's final quarter.




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Nonresidential Construction Recovery Restrained by Public Funding 1

Joe's View - Insights from Marcum's National Construction Industry
Group Leader
2

Exhibit 1. Nonresidential Construction Spending, January 2009 through
March 2013 - GRAPH
2

Exhibit 2. Construction Employment Growth in 20 Largest US
Metropolitan Areas, March 2013 v. March 2012 - CHART
3

First Quarter 2013 Performance - CHART 4


Issue 2
FOURTH QUARTER 2012


Nonresidential Construction
Sector Flat in Fourth Quarter
The combination of electoral uncertainty, fears of a fall off the fiscal cliff, a sharp decline in defense outlays and negative adjustments to inventory produced a shrinking U.S. economy during last year's final quarter. Real gross domestic product decreased 0.1 percent at a seasonally adjusted annual rate in the fourth quarter, ending a growth streak for the U.S. economy that spanned 13 quarters. Overall annual economic growth tallied 2.2 percent in 2012, following a 1.8 percent annual increase in 2011.




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Nonresidential Construction Sector Flat in the Fourth Quarter 1

Joe's View - Insight's from Marcum's National Construction Industry Group Leader 2

Exhibit 1. Monthly Nonresidential Construction Employment, January 2009 through December 2012 - GRAPH 2

Exhibit 2. Architecture Billings Index, December 2007 through December 2012 - GRAPH 2

Fourth Quarter 2012 Performance - CHART 3


Issue 1
THIRD QUARTER 2012


Nonresidential Construction's
Recovery Has Stalled
During the third quarter of 2012, the U.S. economy expanded for a 13th consecutive quarter. Unfortunately, nonresidential construction has not been among the economic segments experiencing meaningful recovery. While the broader economy expanded at a 2 percent annualized rate during the third quarter, due in part to ongoing consumer spending growth, nonresidential investment declined 4.4 percent on an annualized basis following a modest 0.3 percent gain during the second.




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Nonresidential Construction's Recovery Has Stalled 1

Joe's View - Insight's from Marcum's National Construction Industry Group Leader 2

Exhibit 1. Monthly Nonresidential Construction Spending Growth, October 2009 through September 2012 - GRAPH 2

Exhibit 2. Architecture Billings Index, December 2007 through September 2012 - GRAPH 2

Third Quarter 2012 Performance - CHART 3

 


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