Government Legislation & Investment to Boost Construction Spending

Cleveland OH, November 21, 2023 — US construction expenditures in nominal terms are forecast to advance 4.7% annually through 2027, according to Construction: United States, a report recently released by Freedonia Focus Reports. Construction contractors stand to benefit from continued gains in the number of households; consumer incomes; and business, nonprofit organization, and government investment. In addition, the 2021 Infrastructure Investment and Jobs Act will boost government investment in construction. The 2022 CHIPS and Science Act and the Inflation Reduction Act will support spending on industrial facility construction to produce items such as computer chips, electric vehicles, and electric vehicle batteries. Nonbuilding construction contractors are projected to benefit from the installation of renewable energy facilities incentivized by the Inflation Reduction Act. Faster growth will be limited by the high cost of new construction, particularly due to high material costs caused by supply shortages and the high labor and land costs in many densely populated areas. In real terms, construction expenditures are forecast to rise 1.2% annually through 2027.

In 2023, construction expenditures in nominal terms are projected to expand less than 1.0%. Growth will stem from rising prices as input costs increase, including labor, land, lumber, and fuel. In real terms, spending is expected to fall 3.9%, hampered significantly by rising interest rates. In addition, demand for new housing and residential improvements was satiated by the high level of activity in the 2020-2022 period.

These and other key insights are featured in Construction: United States. This report forecasts to 2023 and 2027 US construction expenditures in nominal and real (inflation-adjusted) US dollars. Total construction expenditures in nominal and real terms are segmented by market in terms of:

• residential building

  • new single-unit housing

  • new multiple-unit housing

  • improvements

• commercial building

  • office, trade, and lodging

  • institutional

  • industrial

  • transportation

  • other commercial buildings such as public safety and recreation

• nonbuilding

  • highways and streets

  • other transportation

  • sewer and water supply

  • power

  • telecommunications

  • other nonbuilding construction such as breakwater systems and dams

Total expenditures in nominal terms are also segmented by region as follows:

• South

• West

• Midwest

• Northeast

To illustrate historical trends, total expenditures and the various segments are provided in annual series from 2012 to 2022.

The scope of this report represents new construction and improvements such as additions, alterations, and major replacements (e.g., heating systems). Maintenance and repairs for existing structures and service facilities are excluded. Also excluded are land acquisition costs, drilling of gas and oil wells, and digging and shoring of mines.
As defined by the US Census Bureau, expenditures represent architectural and engineering costs; labor, material, and overhead costs; interest and taxes paid during construction; and contractors’ profits.

More information about the report is available at:
https://www.freedoniagroup.com/freedonia-focus/construction-united-states-ff60054.htm

About Freedonia Focus Reports
Each month, The Freedonia Group – a division of MarketResearch.com – publishes over 20 new or updated Freedonia Focus Reports, providing fresh, unbiased analysis on a wide variety of markets and industries. Published in 20-30 pages, Focus Report coverage ranges from raw materials to finished manufactured goods and related services such as freight and construction. Additional Construction & Building Products reports can be purchased at Freedonia Focus Reports or MarketResearch.com.

Analysis is intended to guide the busy reader through pertinent topics in rapid succession, including:

• total historical market size and industry output

• segmentation by products and markets

• identification of market drivers, constraints, and key indicators

• segment-by-segment outlook in five-year forecasts

• a survey of the supply base

• suggested resources for further study