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Baby-sized building boom
Portlands building boom seems intense to Oregonians: infilling, density and historic preservation are making changes all around the city at the most rapid pace in anyones memory.
But the construction value Oregon is adding to its gross domestic product is actually fourth-lowest in the nation, falling by 0.2 percent over the last year according to a new report.
The report released by Associated Builders and Contractors (ABC) on Aug. 17, found that nationally, Oregons construction industry ranked 47th overall in contribution to state GDP.
The report found construction increased in 30 states, was stagnant in 14 and decreased in six from 2014 to 2015. Oregons construction contribution fell from 3.5 percent in 2014 to 3.3 percent in 2015.
Oregon has seen a decrease in construction value added as a percentage since 1997, when it saw a high of 9.5 percent increase. While construction continued to add value to the state economy, it slowed over the years, dropping from a 4.4 percent contribution in 2008 to a 3.6 percent increase in 2009.
In 2011, Oregon had the lowest share along with Connecticut and New York at 3.0 percent, but that was also the lowest point for Oregon.
Oregons construction simply doesnt catch up with the GDP contributed by the states historically prominent industries.
The study reads The state (of Oregon) is no longer dependent on just agriculture, natural resources and tourism, though these remain important e.g., Oregon is still a major lumber producer but has spread out to manufacturing and high tech.
Lower than Oregon are Delaware, Connecticut and New York the last two of which tied for the third year in a row for the lowest construction contribution to state GDP at 3.1 percent.
As a region, the far west including Alaska, California, Hawaii, Nevada, Oregon and Washington added an average of 3.6 percent to state GDP in construction value last year.
Construction continued to play a vital role in the U.S. economy in 2015, increasing its percentage contribution to GDP nationally and in 30 states, said economist Bernard Markstein, Ph.D., president and chief economist of Markstein Advisors, who conducted the analysis for ABC.
Indirectly, construction investments add even more to the economy, including purchases like equipment, new factories, furniture for offices or residential properties and appliances, adding 2 to 3 percent to the impact of construction activity on the economy.
The recovery is being led by consumers who have benefited from improved job markets, increased income and low energy prices and who are spending their increases in disposable income, Markstein said. The industry continues to experience growth following the Great Recession, led by investment in lodging, office, manufacturing and multifamily construction.
Between 1999 through 2015, national residential and nonresidential real construction investment, adjusted for inflation, varied from 9.4 percent of the GDP in 1999 to 5.1 percent in 2010 and 2011. In 2014 and 2015, construction investment was 6 percent of the GDP, including all types of private and public construction.
Since the recession, multifamily construction has returned to normal and new residential building is strong.
However, the study found many small builders are struggling to find financing and sufficient skilled labor, limiting builders ability to provide new homes at market prices.
Lodging, office and manufacturing were areas of construction besides residential that did well in 2015 and 2014. Commercial construction, mainly retail, was strong in 2014, but growth slowed significantly in 2015.
Single-family construction is expected to increase into the rest of this year and accelerate into 2017, gaining healthy percentage points from a relatively low base, still remaining below the nations long-term needs.
Multi-family construction is expected to rise this year at a slower pace than 2015, and flatten out in 2017.
The report forecasts the U.S. economy will move forward slow and steady, but will come up against a few external risks such as the fallout from Brexit, economic developments in China, volatile energy prices and an anticipated increase in federal interest rates. Negative shocks from these factors could push the nation to recession, though the expectation is the construction industry will continue to advance at a reasonable rate.