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The Presidential election is over, and new economic stories are about to begin. The essence of the voter appeals made by politicians when they are seeking higher office can be summarized as, “Let me portray (accurately or inaccurately) what my opponent has done versus what I will do.”
This never changes. Therefore, and admittedly looking way ahead, the question will eventually become how 2024-2028 performances will compare with what transpired from 2000 to 2024.
In other words, the results between November 2020 and November 2024 establish the targets that the new administration will strive to beat between November 2024 and November 2028.
What were the results for many of the nation’s key economic indicators between the penultimate months, or latest ‘reporting’ months, of 2020 and 2024? That’s what this article will delve into.
With a nod to my main audience, the ending section will focus on the construction industry.
America’s current-dollar gross domestic product (GDP) grew by +35.3% from Q3 2020 to Q3 2024, based on SAAR (seasonally adjusted at an annual rate) figures from the Bureau of Economic Analysis (BEA). The ‘real’ or inflation-adjusted change in GDP over the four years was +13.8%. The big hit to GDP, tied to the appearance of COVID-19, occurred a quarter in front of (i.e., in Q2 2020) the time frame we’re examining.
Clearly, an upsurge in prices played a major role in lifting current-dollar GDP by more than one-third from Q3 2020 to Q3 2024. I’ll have more to say on inflation in a moment.
A major driver of GDP growth is consumer spending, which in turn has a large retail sales component in addition to the purchasing of services.
According to the Census Bureau, the four-year performance of total retail sales has been +25.8%. As subsets of the total, food and beverage store sales have been +19.9%; total auto and parts sales, +20.7%; gas station sales +39.7%; and furniture and home furnishing receipts, +2.4%. The latter low number can be explained by a homebuilding market in which current monthly ‘starts’ (1.354 million units SAAR) are below what they were four years ago (1.463 million units).
Many of the outsized percent gains in retail sales can be attributed to inflation. The all-items Consumer Price Index (CPI) calculated by the Bureau of Labor Statistics (BLS) has jumped by +21.1% since the last change in administrations. ‘Food at home’ as a line item of the CPI is +22.3%; rent, +23.6%; new vehicles, +20.4%; gasoline, +46.0%; motor vehicle repairs, +44.4%; and most alarming of all, motor vehicle insurance, +59.7%.
It’s important to note that problems on the price front have arisen from unprecedented circumstances. To combat the coronavirus, China put a hold on much of its industrial activity and shut down its ports, initiating worldwide supply shortages for many goods. Ramifications ran rampant, with extraordinary factors coming into play ‒ i.e., the fighting in Ukraine and the transitioning in the domestic auto market to expensive electric vehicles.
The challenge for the new regime in Washington will be to ensure that the inflation tiger, with the all-items CPI now at just +2.4% y/y, down from a peak of +9.0% y/y, has truly been tamed. Across the board tariff hikes and the deportation of migrant farm workers, if such policies are fully embraced, may jeopardize the inflation reduction success that has recently been achieved.
Turning to the Construction Industry’s Experience
It’s been mentioned that nominal or current dollar GDP over the last four years was ahead by a little more than a third, +35.3%. As for the value of construction, as measured by the Census Bureau in its put-in-place (PIP) data series, I think the news will come as a shocker for readers. The dollar volume leap was even more.
Total PIP construction (SAAR) from September 2020 to September 2024 was +42.3%, with residential at +37.5% and nonresidential at +46.1%. (For residential, remember that there was a period of strong ‘starts’ when the Fed kept interest rates super low at the beginning of the pandemic.)
Private PIP construction has been +44.3% and public, +35.7%.
Within ‘private’ construction, the standout performer has been manufacturing, +221.9%. Within ‘public’ construction, the biggest gainers have been ‘effluent removal/water supply,’ +74.7%, and highways and streets, +46.8%.
While there is much valuable information on employment in all corners of the U.S. economy in the monthly Employment Situation report from the BLS, a lot more detail can be found by going online to this location: https://www.bls.gov/data/home.htm.
Due to the same problem that has plagued many sectors, a fewer than desirable number of available workers, the jobs count in construction since late 2020 has been a modest +14.5%.
But there are some truly impressive job count increases at a granular level of construction. Industrial building construction has seen a +25.7% increase in hiring; residential remodelers, +23.3%; roofing contractors, +19.0%; electrical contractors, +17.5%; and plumbing, heating, and air conditioning contractors, +16.6%.
At the short end of the spectrum have been drywall and insulation contractors, -2.6%, and tile and terrazzo contractors, -11.6%, in terms of number of related jobs.
The bottom line is that the past four years have been quite good for firms and employees working in the construction industry. We’ll have to wait and see if the next four years are as bountiful.
About ConstructConnect
Construction Starts Here™ at ConstructConnect, where our mission is to help the construction industry start every project on a solid foundation. A leading provider of software solutions for the preconstruction industry, ConstructConnect empowers commercial construction firms to streamline their workflows and maximize productivity. ConstructConnect operates as a business unit of Roper Technologies (Nasdaq: ROP), a constituent of the Nasdaq 100, S&P 500, and Fortune 1000.
About Alex Carrick
Alex Carrick served as Chief Economist at ConstructConnect for over 39 years. He retired in 2024.
