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Construction Driving Economic Growth - 9/18/15

In July, U.S. construction spending climbed to its highest level in seven years, bolstered by an increase in residential construction, factories and power plants.  Total construction spending has risen thirteen point seven percent over the past twelve months.  As reported by the Associated Press, the surge in construction spending has induced some forecasters to alter their projections for economy-wide growth. 

For instance, analysts at Barclays now project that the economy is on track to expand two point six percent during the current quarter and that second quarter growth will be revised up to three point eight percent.  Construction, both residential and nonresidential, has emerged as one of the economy’s most important growth drivers. 

The sector’s outlook remains bright, with single family housing starting now at its highest level since December two thousand and seven.  A strong U.S. auto sector is helping to drive investment and construction in the nation’s factories.  Spending by the government on construction continues to be soft, however, with the exception of construction and maintenance of highways and streets.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.