WASHINGTON -- U.S. construction spending dropped to a seven-month low in March as public outlays recorded their largest drop since 2006, which could cause the first-quarter economic growth estimate to be trimmed.
Construction spending fell 1.7 percent to an annual rate of $856.72 billion, the lowest level since August, the Commerce Department said on Wednesday. Spending had increased 1.5 percent in February.
Economists polled by Reuters had expected construction spending to rise 0.7 percent in March.
The across-the-board decline in construction spending was the latest indication that the economy exited the first quarter with less momentum and suggested tighter fiscal policy was starting to take a toll.
The report also raised the risk of a downward revision to the government's moderate growth estimate of a 2.5 percent rate for the first quarter.
Construction spending in March was depressed by a 4.1 percent drop in public construction projects to a 6½-year low. The percentage decline was the largest since March 2002.
Outlays on federal government projects fell 1.7 percent. State and local spending, which is far larger than federal projects, tumbled 4.3 percent, the biggest drop since March 2002.
Spending on private construction projects also fell, slipping 0.6 percent. Residential spending rose 0.4 percent, but those gains were offset by a 1.5 percent drop in spending on private nonresidential structures.
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Construction Spending in March Fell to 7-Month Low
Nationally, the average gas price hit a recent high of $3.74 per gallon, nearly $0.50 higher than it was on Jan. 1. According to website GasBuddy.com, that's about a 14 percent increase since the start of the year.
The start of the new year also marked the end of the temporary 2 percentage point tax break on Social Security contributions. Once that part of President Obama's stimulus package expired, your paychecks went back to being 2 percent smaller. For the average family, that adds up to about $1,000 a year.
That same "average family," by the way, already earns only about $50,000 a year today. And according to CNN, that's about $4,000 less than you were earning in 2000.
A disconcerting report from Sallie Mae last week showed that about one-third of Americans working toward retirement are having to raid their retirement savings to pay for their kids' college educations.
According to a poll commissioned by Bankrate.com (RATE) in February, only 55 percent of Americans have enough money tucked away in their savings accounts and "emergency funds" to cover the amounts owed on their credit cards.
That Bankrate poll also revealed that among women in particular, 51 percent actually owe more on their credit cards than they have cash in the bank. Digging deeper into the data, Bankrate reported that while high earners are doing well, and generally flush, most people (59 percent) who earn less than $30,000 annually owe more on their cards than they have in savings. And these are the people least able to afford the high cost of credit card interest.
Speaking of earnings -- and jobs -- the same unemployment report that set Wall Street to cheering Friday can be looked at from a glass half empty perspective as well. The new, lower unemployment level of 7.7 percent is the best number we've seen since the Great Recession ended. However, The Wall Street Journal points out that 7.7 percent is very close to the worst unemployment ever got (7.8 percent) in the 1991 recession. Our best number in years is within a whisker of the worst they faced back then.
The overall workforce participation rate -- the percentage of Americans currently earning wages at all -- currently stands at just 63.5 percent. According to the Bureau of Labor Statistics, that's much worse than what we saw in the 1991 recession. It's the lowest we've seen since the recession that hit during the Carter administration.
Little wonder, then, that according to the Bankrate survey, people are increasingly concerned about "job security." Friday's unemployment report may suggest that the jobs market is on the mend, but most people (59 percent) say they feel no more or less confident in their employment situation today than they did a year ago. Among those polled whose opinions have changed, 23 percent said they feel "less secure today" than they did a year ago, versus 19 percent who feel more secure.
That doesn't exactly jibe with the story that things are getting better.
It's great news for folks who own stocks, no doubt, and according to the Journal , more than 90 percent of people earning $100,000 or more do. But what about the rest of us? Fewer than 46 percent of Americans earning less than $50,000 are invested in the stock market -- and remember, "$50,000" is the average income in America today.
So yes, It turns out for the average American, things may not be getting better at all.