Construction Spending Gains 1.2%, Lowest Increase Since a Loss in 1982
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WASHINGTON — Construction spending advanced last year at its slowest pace since the 1982 recession, the government said Thursday. Analysts blamed the weakness on high interest rates, overbuilding and a sluggish economy.
The Commerce Department said residential, non-residential and government construction spending totaled $414.7 billion, a 1.2% increase over 1988 but the smallest gain since a 5.1% decline in 1982.
Contributing to the poor showing was a 0.6% decline in December spending, which was buffeted by record cold weather over most of the country east of the Rockies.
Spending totaled a seasonally adjusted annual rate of $414.6 billion in December, nearly erasing a 0.7% gain in November. It was the lowest one-month increase since a decline of 1% last June.
Analysts said Federal Reserve actions that kept interest rates relatively high through most of the year made construction more expensive. “Plus, you had a number of good years of construction” before 1989, said David Berson, chief economist for the Federal National Mortgage Assn. “Eventually, you have all the houses and office buildings that you need. You run out of pent-up demand.”
CONSTRUCTION SPENDING
Billions of dollars, seasonally adjusted Dec., ‘89: 414.6 Nov., ‘89: 417.3 Dec., ‘88: 415.4 Source: Commerce Department
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