Construction Spending in the United States
Total Construction Spending
The construction industry is one of the largest industries in the United States, responsible for more that $1 trillion in annual spending. Since 2011, total construction spending has grown by 7.9 percent annually and is expected to maintain a similar compounded annual growth rate to reach $1.78 trillion by 2022. For context, total U.S. gross domestic product over the same time period showed a compounded annual growth rate of 3.8 percent.
Broad economic growth has and will continue to increase demand for new commercial and residential buildings, as well as infrastructure projects, for the near future. As such, employment in the construction industry is projected to benefit. According to the Bureau of Labor Statistics, construction occupations are projected to grow faster than the average across all U.S. occupations, with 746,600 new jobs to be added between 2016 and 2026.
As of May 2017, the median annual wage for construction employees was $44,730–nearly 20 percent higher than the median annual wage for all occupations–despite the fact that most construction occupations do not require any more than a high school degree. Certain construction jobs like elevator installers and repairers have median wages that exceed $79,000 per year.
Private vs. Public
In 2017, private construction projects accounted for over 77 percent of total construction spending, with public projects accounting for less than 23 percent. At the height of the recession between 2010 and 2011, both private and public construction projects slowed; however, spending on private projects decreased more substantially. In 2010, public projects accounted for almost 38 percent of total construction spending, significantly greater than their share today.
Since 2011, spending on private construction projects has grown rapidly at a compounded annual growth rate of 11.5 percent. Public construction spending, on the other hand, has declined slightly. At 11.5 percent annual growth, private construction spending is on pace to exceed $1 trillion in 2018.
Residential vs. Nonresidential
Across both public and private projects, residential construction was at a 10-year high in 2017, accounting for roughly 43 percent of total spending (up from just 31 percent in 2010). Since bottoming out in 2010, spending on residential construction projects has more than doubled from roughly $252 billion to $532 billion. Nonresidential construction spending, on the other hand, declined slightly between 2016 and 2017, despite growing 28 percent overall since 2010.
Nonresidential Breakdown
Education and power projects accounted for the largest share of nonresidential spending in 2017. Since 2010, spending on the following types of projects grew the most: lodging (+146 percent), commercial (+119 percent), office (+77 percent), and manufacturing (+61 percent). The sharpest declines were in religious (-36 percent) and public safety (-26 percent) projects.
Private Construction Spending
Residential vs. Nonresidential
Unlike public construction spending, which is fueled by nonresidential projects, spending on private construction is split closely between residential and nonresidential projects. In 2017, residential projects accounted for 55 percent of total spending, up from 48 percent in 2010. As such, spending on private residential projects grew more over the past seven years than that on private nonresidential projects (117 percent vs. 66 percent respectively).
Nonresidential Breakdown
Power and commercial projects dominate private nonresidential spending at $91 billion and $85 billion respectively. The fastest growing private nonresidential project types between 2010 and 2017 were: lodging (+150 percent), office (+140 percent), commercial (+128 percent), and amusement and recreation (+112 percent). The sharpest declines were in water supply (-74 percent) and public safety (-60 percent) projects.
Public Construction Spending
Residential vs. Nonresidential
Public construction is dominated by nonresidential projects, which made up close to 98 percent of total spending in 2017. Since 2010, spending on public residential and nonresidential projects declined by roughly 35 percent and 6 percent respectively.
Nonresidential Breakdown
Highway and education projects accounted for more than half of total public nonresidential construction spending in 2017. The fastest growing public nonresidential project types between 2010 and 2017 were: highway and street (+8 percent), transportation (+7 percent), amusement and recreation (+6 percent), and commercial (+5 percent). The sharpest declines were in: power (-59 percent), office (-39 percent), and public safety (-25 percent).
