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Construction Worker Shortages, Political Gridlock Keep Spending Flat

Private demand for building is healthy, but gridlock in Congress and in several state governments is on track to depress public infrastructure spending.

By Erika Morphy | erikamorphy | Updated on July 05, 2017

Ken Simonson

WASHINGTON, DC–Construction spending in May totaled $1.230 trillion at a seasonally adjusted annual rate, an amount that was unchanged from the upwardly revised April total, according to Census Bureau statistics released last month. [see charts below]. Now, a new analysis by the Associated General Contractors of America adds some color to those numbers, primarily by noting that contractors are having trouble finding enough labor to keep projects on schedule and also that political gridlock is holding back construction sector growth.

“Spending on most types of private construction has remained relatively flat from month to month so far in 2017 but at a higher level than in the same period of 2016,” Ken Simonson, the association’s chief economist said in a prepared statement. “By contrast, public investment in infrastructure has generally declined from last year’s levels despite a pickup from April to May.” Simonson’s take: private demand for building is healthy, but gridlock in Congress and in several state governments is on track to depress public infrastructure spending.

Looking For Qualified Workers

Let’s start with the growing scarcity of construction labor. There was a 6.1% increase from January through May 2017 over the same period in 2016. That shows overall demand for construction remains positive. However, at the same time there has been a recent flattening of investment. That coincides with more frequent reports that contractors and home builders are stretching out completion times because they cannot find enough qualified workers, according to Simonson.

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