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On Construction Data 🧵🏚️
1. The most recent data for April show construction spending increased by 1.24%, with 0.2% and 1.04% coming from residential and nonresidential spending, respectively.
1. The most recent data for April show construction spending increased by 1.24%, with 0.2% and 1.04% coming from residential and nonresidential spending, respectively.
2. This data surprised consensus expectations of 0.2% and contributed to an acceleration in the twelve-month trend.
3. For further context, we show the composition of the most change in monthly construction spending. The strongest contributor to construction spending in April was Manufacturing, while the weakest was Religious construction spending:
4. As noted previously, residential construction spending has improved recently, with homebuilder price action corresponding to these conditions.
5. This improvement in housing spending has increased our GDP nowcast and our future estimates for real growth.
6. The strength in the latest data pushes our contractionary GDP forecasts out to the first quarter of 2024, with inflation resilient. We estimate end-of-year real GDP growth at 0.4%, with CPI inflation at 3.9%.
7. The combination of these expected outcomes will likely create a challenging environment for both stocks and bonds. Until profits meaningfully contract, these pressures are likely to be worse for bonds than stocks.
8. hen growth turns, it will likely be significantly worse for bonds than stocks. Either way, the outlook for stock and bond portfolios is looking worse relative to the start of this year, where a bout of disinflation supported both. #construction #macro #markets
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