Digging into Construction Data Jeff Crawford NABE Teleconference April 8, 2010

2 Private Fixed Investment in structures ▪ Useful references on  How BEA Accounts for investment in Private Structures by Paul Lally  Survey of Current Business (February 2009)  Measuring the Economy: A Primer on GDP and National Income and product Accounts 

3 Construction Statistics in the NIPAs  Fixed Investment  Private investment in structures and equipment and software. Also government investment ▪ Fixed Assets  Statistics for net stock, investment, depreciation, other changes in volume of assets ▪ GDP by Industry  Industry composition of U.S, economy by value added (Gross output minus intermediate inputs)

4 Finding Fixed Investment Data ▪ From BEA homepage ▪ Interactive data tables  Interactive Tables  National Economic Data  National income and product accounts National income and product accounts Choose a table from a list of All NIPA Tableslist of All NIPA Tables 5 - Saving and Investment

5 Investment in structures  Investment in Structures is measured mainly as the sum of the costs of inputs of all construction “put in place” during the accounting period. Included are:  Costs of materials installed or erected  Costs of labor and the cost of construction equipment rental  Cost of architectural and engineering work  Overhead and office costs incurred by the projects owners  Interest and taxes paid during construction  Contractors’ profit

6 Other expenditures in private investment  Brokers’ commissions on the sale of new and used structures  Net purchases of used structures from government  Improvements to structures  Mining exploration, shafts and wells  Other investment (mobile structures, manufactured homes)

7 Residential Investment  In NIPA, home ownership is treated as a business analogous to rental housing.  Housing services of owner-occupants is represented by imputed rent in personal consumption expenditures (PCE).  Imputed rental income for owner-occupants is add to rental income of persons

8 “Real” – Inflation adjusted quantity measures  Deflation: for most components the current dollar measure is divided by appropriate price index  Direct valuation: quantity measure is multiplied by a base period price.

9 Price Indexes ▪ BEA uses a variety of price measures from the Census Bureau, Bureau of Labor Statistics, and trade sources. ▪ A longstanding goal has been to use, when possible, price measures that have been adjusted for quality changes

10 Input price indexes ▪ Because of the heterogeneity of construction projects, structures have historically been priced by their inputs. ▪ Input price index do not account for material or labor substitution and productivity gains ▪ For hospitals, the Turner Construction Company building cost index (an input cost measure) is combined with the single-family houses index to capture some of the effects of productivity gain

11 Output price indexes ▪ Output price indexes capture the effect of changing productivity ▪ Census Bureau new single-family house index ▪ BLS Nonresidential building construction sector indexes  Warehouse building  School building  Office building  Industrial building 