Post by unlawflcombatnt on Jun 30, 2007 14:51:14 GMT -6
(This is a re-post and revision of the previous post on this subject, due to the incomprehensibility of the previous post.)
Yesterday's Construction Spending report is another testament to the government's ability to create economic growth through statistical manipulation. Following large downward revisions to the totals for February and March, the government now shows a "gain" for the month of May in Total Construction, Private Construction, Non-Residential Construction, and Public Construction. They've also concocted a reduction in the stated decline in Residential Construction. However, even with the downward revisions of February's and March's numbers, they were unable to eliminated the -2.8% decline (-$33.4 billion) in Total Construction Spending over the last year, nor the -17.3% (or -$116 billion) decline in
Residential Construction Spending over the last year. Total Private Construction Spending is also down -6.5% over the last year.
Below is a modified, combined copy of the tables (showing the actual numbers) from the Census Bureau. The top half shows the current May totals. The bottom half shows the previously published February and March totals (which have since been revised downward.) The "revised" and previous March totals are underlined.
May's annualized Total Construction Spending of $1,176 billion is -$11 billion less (or -1%) below March's originally stated $1,187 billion. May's total Private Construction Spending of $892 billion was -$8 billion (or -0.9%) less than March's originally stated $900 billion. (The original numbers for March & February can be seen in the bottom part of the chart above.)
May's Residential Construction total of $556 billion was -$22 billion (or -3.8%) less than March's originally posted $578 billion. Even a larger decline occurred between May's Residential Construction and February's total. May's decline was -$27.6 billion (or -4.7%) less than February's $583.6 billion.
May's Non-Residential Construction total of $620.5 billion actually was +$10.5 billion greater than the originally posted $610 billion for March 2007. (However, as noted above, this still leaves a decline in Total Construction Spending from March 2007of roughly -1%.
ANNUAL CHANGES:
May 2007's Total Construction Spending of $1,176.57 billion was -$33 billion less than May 2006's $1,210 billion (in Current, or non-inflation-adjusted dollars). This is a -2.8% decline over the last year.
May 2007's Residential Construction Spending of $556 billion was -$116 billion less than May 2006's $672 billion (in current dollars). This was a -17.3% decline over the last year.
May 2007's Non-Residential Construction Spending of $620.552 billion was +$82.6 billion more than May 2006's $537.9 billion. This was a +13.3 increase over the last year.
May 2007's Total Private Construction Spending of $892 billion was -$62.4 billion less than May 2006's $954.4 billion. This was a decline of -6.5% over the last year.
SUMMARY of "Current Dollar" Changes:
From original March publication thru May (2-month change)
(totals may not add up due to rounding off)
Total Construction Spending: -$11.0 billion (-1.0%)
Residential Constr. Spending: -$22.0 billion (-3.8%)
Non-Resid. Constr. Spending: +$10.5 billion (+1.7%)
Total Private Const Spending: -$ 8.2 billion (-0.9%)
Year-over-year (May 2006 thru May 2007) (12-month change, in "current dollars")
Total Construction Spending: -$ 33 billion (-2.8%)
Residential Constr. Spending: -$116 billion (-17.3%)
Non-Resid. Constr. Spending: +$82.6 billion (+13.3%)
Total Private Const Spending: -$62.4 billion (-6.5%)
With a -17.3% (current dollar) decline in Residential Construction over the last year, there is no question that this sector is in a severe Recession. In fact, the entire Construction industry is in Recession, with a -2.8% decline over the last year.
INFLATION-ADJUSTED NUMBERS
A better measure of the changes would factor inflation into the changes over the last year. According to yesterday's GDP report (table 4), the 1st quarter price index change of Residential Construction was 1.6% (And it was 2.0% for the entire year of 2006. Thus adjusting Residential Construction using the only 1st quarter price index will give a much more conservative adjustment for inflation-- in other words, it will understate inflation.) Using the most conservative number of 1.6%, the inflation-adjusted increase in Residential Construction Spending is $556 billion divided by 1.016 = $547 billion. That makes the inflation adjusted decline in Residential Construction. This expands the actual decline in Residential Construction Spending from -$116 billion to -$135 billion.
Converting this into "chained 2000 dollars" requires multiplying by "current dollars" by a factor to reduce it to "chained 2000 dollars." A rough conversion factor can be arrived at by dividing a "chained 2000 dollar" GDP number by the corresponding "current dollar" GDP number. To convert the -$135 billion current dollar amount into a chained 2000 dollar amount, I divided the 2007 1st quarter "chained 2000 dollar" amount by the 2007 1st quarter "current dollar" amount. ($11,532.8 billion divide by $13,620.2 billion) This gives a factor of 0.8467. Multiplying -$135 X 0.8467 = $114.3 billion. This "real" dollar decline of -$114.3 billion is the equivalent of 1% of our 2006 real GDP of $11,415 billion.
For Non-Residential Construction the real change can also be approximated. Again, using yesterday's GDP report (Table 4), the 1st quarter price index increase was 2.0% (Again, this is a conservative estimate since the annual 2006 price index increase for non-residential construction was 3.3%). Using only the conservative 1st quarter change of 2.0%, the calculation is May 2007's $620.552 billion divided by 1.020 = $608.3 billion. Subtracting May 2006's $537.922 billion from $608.3 billion = +$70.3 billion. Again, converting into "chained 2000 dollars" by multiplying by 0.8467 = +$59.5 billion. This increase is about 1/2 of the -$114.3 billion decline in Residential Construction.
The Total Construction Spending change, in "real" (or chained 2000 dollars) can now be calculated. Adding +59.5 billion to -114.3 billion = -54.8 billion in chained 2000 dollars.
This is about 0.48% of our real GDP of $11,415 billion ($11.415 trillion).
SUMMARY of "Chained 2000 Dollar" Changes
Year-over-year (May 2006 thru May 2007) Adjusted for Inflation
Total Construction Spending: -$ 54.8 billion (-5.3%)
Residential Constr. Spending: -$114.3 billion (-19%)
Non-Resid. Constr. Spending: +$59.5 billion (+12.8%)
Below is a good year-over-year graph of the downward trend in Construction Spending from Briefing.com.
Despite the glowing reports by media propagandists today, the long-term trend is downward.
Again, the Construction sector is in Recession, and the Residential Construction sector is in a severe Recession.
Yesterday's Construction Spending report is another testament to the government's ability to create economic growth through statistical manipulation. Following large downward revisions to the totals for February and March, the government now shows a "gain" for the month of May in Total Construction, Private Construction, Non-Residential Construction, and Public Construction. They've also concocted a reduction in the stated decline in Residential Construction. However, even with the downward revisions of February's and March's numbers, they were unable to eliminated the -2.8% decline (-$33.4 billion) in Total Construction Spending over the last year, nor the -17.3% (or -$116 billion) decline in
Residential Construction Spending over the last year. Total Private Construction Spending is also down -6.5% over the last year.
Below is a modified, combined copy of the tables (showing the actual numbers) from the Census Bureau. The top half shows the current May totals. The bottom half shows the previously published February and March totals (which have since been revised downward.) The "revised" and previous March totals are underlined.
May's annualized Total Construction Spending of $1,176 billion is -$11 billion less (or -1%) below March's originally stated $1,187 billion. May's total Private Construction Spending of $892 billion was -$8 billion (or -0.9%) less than March's originally stated $900 billion. (The original numbers for March & February can be seen in the bottom part of the chart above.)
May's Residential Construction total of $556 billion was -$22 billion (or -3.8%) less than March's originally posted $578 billion. Even a larger decline occurred between May's Residential Construction and February's total. May's decline was -$27.6 billion (or -4.7%) less than February's $583.6 billion.
May's Non-Residential Construction total of $620.5 billion actually was +$10.5 billion greater than the originally posted $610 billion for March 2007. (However, as noted above, this still leaves a decline in Total Construction Spending from March 2007of roughly -1%.
ANNUAL CHANGES:
May 2007's Total Construction Spending of $1,176.57 billion was -$33 billion less than May 2006's $1,210 billion (in Current, or non-inflation-adjusted dollars). This is a -2.8% decline over the last year.
May 2007's Residential Construction Spending of $556 billion was -$116 billion less than May 2006's $672 billion (in current dollars). This was a -17.3% decline over the last year.
May 2007's Non-Residential Construction Spending of $620.552 billion was +$82.6 billion more than May 2006's $537.9 billion. This was a +13.3 increase over the last year.
May 2007's Total Private Construction Spending of $892 billion was -$62.4 billion less than May 2006's $954.4 billion. This was a decline of -6.5% over the last year.
SUMMARY of "Current Dollar" Changes:
From original March publication thru May (2-month change)
(totals may not add up due to rounding off)
Total Construction Spending: -$11.0 billion (-1.0%)
Residential Constr. Spending: -$22.0 billion (-3.8%)
Non-Resid. Constr. Spending: +$10.5 billion (+1.7%)
Total Private Const Spending: -$ 8.2 billion (-0.9%)
Year-over-year (May 2006 thru May 2007) (12-month change, in "current dollars")
Total Construction Spending: -$ 33 billion (-2.8%)
Residential Constr. Spending: -$116 billion (-17.3%)
Non-Resid. Constr. Spending: +$82.6 billion (+13.3%)
Total Private Const Spending: -$62.4 billion (-6.5%)
With a -17.3% (current dollar) decline in Residential Construction over the last year, there is no question that this sector is in a severe Recession. In fact, the entire Construction industry is in Recession, with a -2.8% decline over the last year.
INFLATION-ADJUSTED NUMBERS
A better measure of the changes would factor inflation into the changes over the last year. According to yesterday's GDP report (table 4), the 1st quarter price index change of Residential Construction was 1.6% (And it was 2.0% for the entire year of 2006. Thus adjusting Residential Construction using the only 1st quarter price index will give a much more conservative adjustment for inflation-- in other words, it will understate inflation.) Using the most conservative number of 1.6%, the inflation-adjusted increase in Residential Construction Spending is $556 billion divided by 1.016 = $547 billion. That makes the inflation adjusted decline in Residential Construction. This expands the actual decline in Residential Construction Spending from -$116 billion to -$135 billion.
Converting this into "chained 2000 dollars" requires multiplying by "current dollars" by a factor to reduce it to "chained 2000 dollars." A rough conversion factor can be arrived at by dividing a "chained 2000 dollar" GDP number by the corresponding "current dollar" GDP number. To convert the -$135 billion current dollar amount into a chained 2000 dollar amount, I divided the 2007 1st quarter "chained 2000 dollar" amount by the 2007 1st quarter "current dollar" amount. ($11,532.8 billion divide by $13,620.2 billion) This gives a factor of 0.8467. Multiplying -$135 X 0.8467 = $114.3 billion. This "real" dollar decline of -$114.3 billion is the equivalent of 1% of our 2006 real GDP of $11,415 billion.
For Non-Residential Construction the real change can also be approximated. Again, using yesterday's GDP report (Table 4), the 1st quarter price index increase was 2.0% (Again, this is a conservative estimate since the annual 2006 price index increase for non-residential construction was 3.3%). Using only the conservative 1st quarter change of 2.0%, the calculation is May 2007's $620.552 billion divided by 1.020 = $608.3 billion. Subtracting May 2006's $537.922 billion from $608.3 billion = +$70.3 billion. Again, converting into "chained 2000 dollars" by multiplying by 0.8467 = +$59.5 billion. This increase is about 1/2 of the -$114.3 billion decline in Residential Construction.
The Total Construction Spending change, in "real" (or chained 2000 dollars) can now be calculated. Adding +59.5 billion to -114.3 billion = -54.8 billion in chained 2000 dollars.
This is about 0.48% of our real GDP of $11,415 billion ($11.415 trillion).
SUMMARY of "Chained 2000 Dollar" Changes
Year-over-year (May 2006 thru May 2007) Adjusted for Inflation
Total Construction Spending: -$ 54.8 billion (-5.3%)
Residential Constr. Spending: -$114.3 billion (-19%)
Non-Resid. Constr. Spending: +$59.5 billion (+12.8%)
Below is a good year-over-year graph of the downward trend in Construction Spending from Briefing.com.
Despite the glowing reports by media propagandists today, the long-term trend is downward.
Again, the Construction sector is in Recession, and the Residential Construction sector is in a severe Recession.