Money Matters — GDP Up in the Second Quarter, Good News for Contractors

Despite the nation’s sluggish economy, nonresidential fixed investment jumped 17 percent in the second quarter of 2010 following a revised 7.8 percent increase in the first quarter, according to the U.S. Commerce Department’s July 30 gross domestic product (GDP) report. Fixed investment in nonresidential structures increased 5.2 percent in the second quarter following seven straight quarters of losses. Fixed investment in nonresidential equipment and software spiked up 21.9 percent following a 20.4 percent increase in the first quarter of the year.

“From the perspective of construction activity, the news is quite good and is a reflection of both economic recovery and the impact of various stimulus programs,” said Associated Builders and Contractors chief economist Anirban Basu. “The key issue is the extent to which the enhanced levels of construction data in the second quarter GDP report were merely a reflection of stimulus as opposed to sustainable recovery.”

Residential fixed investment increased 27.9 percent in the second quarter following a 12.3 percent decrease in the first quarter. Total exports increased 10.3 percent in the second quarter as exports of goods increased 2.3 percent and exports of services increased 28.8 percent. Total imports increased 28.8 percent last quarter as imports of goods increased 35.4 percent and imports of services increased 1.6 percent.