Tuesday, March 4, 2008

Construction Spending Craters

January recorded a fourteen-year low in construction, another indication that the boom-to-bust real estate cycle continues to ripple through the economy. (The construction industry accounts for about 9% of gross domestic product.) The credit crunch that hit the residential market also hit the commercial market, shunting the flow of funds into developers' pipelines. With oil prices hitting a 28-year high at $103.95 per barrel, the economic outlook remains neutral -- on a good day. Speculating whether we're in a recession is useless, reports Joel Naroff of Naroff Economic Advisors. "We're bouncing around the bottom. It almost doesn't matter where we are right now because it feels like a recession to households and businesses."