By Dees Stribling, Contributing Editor
U.S. construction spending rose more than expected during March, according to the U.S. Department of Commerce on Monday. The 1.4 percent gain was the largest in the construction sector since April 2010, and came on the heels of a 2.4 percent decline in the sector in February. For the 12 months ended in March 2011, however, construction spending was down 6.7 percent.
Driving the monthly uptick was an increase of 5.5 percent in corporate outlays for factories, which isn’t surprising considering the surge in U.S. exports in recent months, partly fueled by a weak dollar. Also, construction spending for hotels and other hospitality properties gained 4.7 percent. More surprisingly, housing was a factor in increased construction spending in March–renovations, that is, not new construction. Including renovations, residential construction was up 2.6 percent.
With the March gain, construction spending stands at an annualized rate of $786.9 billion, or roughly as much as occurred in 1999. The industry peaked in 2006 at just over $1.2 trillion annually, a construction bulge whose legacy is still seen in unsold houses and CRE with high vacancy rates.
Federal government has a little more debt-ceiling breathing room
An unexpected increase in tax revenues has extended the time the federal government has before defaulting on its obligations if the debt ceiling isn’t raised, according to the U.S. Department of the Treasury on Monday. Previously, Treasury had estimated that the government would started defaulting sometime in July unless Congress agrees to raise the debt ceiling. Now it says sometime in August.
The actual $14.29 trillion debt ceiling will be reached in about two weeks. But by employing various kinds of financial finagling, which Treasury is already doing or preparing to do, the government will continue paying its bills this summer, even as revenue runs far short of expenditures, as it always does.
“While this updated estimate in theory gives Congress additional time to complete work on increasing the debt limit, I caution strongly against delaying action,” Treasury Secretary Timothy Geithner, wrote Monday to lawmakers. Congress has never let the federal government default since day one of the United States–in more than 200 years, in other words–but some of the current members of that body seem to have a taste for playing chicken.
Bin Laden death briefly moves markets
Will the demise of Osama bin Laden have an economic impact? After all, one of the man’s stated objectives was to wreck the U.S. economy. Despite that, he probably played no part in the damage done to the economy in 2008, though naturally there’s still a fair amount of dispute about just who all the guilty parties are. Even the economic impacts of Osama bin Laden’s most successful act of mass murder, the Sept. 11, 2001 attacks, seem transitory in the light of the decade since then.
The price of oil went down briefly on the news of his death, but the oil market is notoriously excitable about everything. Wall Street bumped up early in the trading day on Monday, but eventually sustained a small downtick. The Dow Jones Industrial Average lost 3.18 points, or a minuscule 0.02 percent, while the S&P 500 was down 0.18 percent and the Nasdaq declined 0.33 percent.