Fiscal cliff concerns threaten construction spending, employment
All major segments of construction spending increased in October, bringing total spending to a 37-month high at an annualized rate of $872 billion, according to an analysis of new federal data released by the Associated General Contractors of America. Private nonresidential construction edged up 0.3 percent for the month and 11 percent compared with October 2011.
Association officials warned, however, that the fiscal cliff imperils future improvement in both public and private spending. Without greater certainty on tax rates and federal spending levels, both private and public construction will quickly reverse recent gains, throwing newly-hired workers back into unemployment, said AGC CEO Stephen Sandherr, in a release.
The threat of the fiscal cliff is also affecting construction employment, with the recent decline in November likely reflecting the fact many contractors have already cut staff and delayed hiring new employees due to fiscal cliff concerns, AGC officials reported in a December 7 release.
Construction employment declined by 20,000 jobs in November while the industry's unemployment rate hit 12.2 percent, according to the association.
The threat of the fiscal cliff's tax increases and federal spending cuts are already having an impact on construction employment, according to an AGC survey of 551 construction firms. Fifty-four percent of firms reported the threat of tax hikes has forced them to adjust their business plans. Should tax rates increase, nearly two-thirds of firms that haven't already acted said they will change their business plans next year, according to the AGC release.