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In the News 
Construction spending edged up very slightly in June, according to the Census Bureau, which reported last week that June's spending reached a seasonally adjusted annual rate of $836 billion, which was 0.1 percent above May's revised estimate of $834.8 billion.
While overall spending was up, public construction spending outpaced private spending in June, which, at a seasonally adjusted annual rate of $527.6 billion, was 0.6 percent below May's revised estimate of $530.9 billion. Similarly, residential construction was at a seasonally adjusted annual rate of $258.3 billion, 0.8 percent below May's revised estimate of $260.3 billion.
The drop is in line with the expiration of federal tax credits for homebuyers in June, and the nation's ongoing shaky employment circumstances. (The latest employment news from the Bureau of Labor Statistics put June's unemployment rate for the United States at 9.6 percent.)
"Support to construction spending via new homes should continue to remain dampened in the coming months," Maxwell Clarke, chief U.S. economist at market researchers IDEAglobal Inc., stated in a note to the firm's clients. "Ongoing difficulty of accessing capital for speculative commercial real estate ventures will continue to act as a deadweight in the overall construction measure."
June's lackluster construction performance was in line with last week's report from the Bureau of Economic Analysis that personal income and personal consumption expenditures (PCE) for June were essentially flat for the month. Personal income increased $3.0 billion, or less than 0.1 percent for June, and disposable personal income (DPI) increased $5.1 billion, or less than 0.1 percent. Conversely, PCE decreased $2.9 billion, or less than 0.1 percent during the month.
Once again, consumers' reticence to spend can be linked back to the job market. Note that personal savings in June were also up at $725.9 billion, compared to May's $713.9 billion.
"It reinforces the general idea that consumers are busy deleveraging and saving money," Dan Greenhaus, chief economic strategist for Miller Tabak, told the New York Times last week. "The problem with this type of a situation — where consumers become more concerned with reducing debt and constraining spending — is you have no idea how long it will last. It could be one month or one year."
This week, watch for headlines about wholesale inventories (August 10) from the Census Bureau and the Department of Commerce; the trade balance (August 11) and export and import prices (August 12) from the Census Bureau and the Bureau of Economic Analysis; the Consumer Price Index (August 13) from the Bureau of Labor Statistics; and business inventories (August 13) from the Census Bureau.
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| Mark Ott | | Loan Officer | | W.J. Bradley Mortgage Capital Corp. | | Office: 928-775-9330 | | NMLS: 189552 | | mark.ott@wjbradley.com | | www.wjbradleyaz.com |
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