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Construction spending sinks in December

Construction spending sinks in December
© Getty Images

U.S. construction spending fell in December amid a broader end-of-year slowdown in the American economy, according to Census Bureau data released Monday.

Public and private spending on U.S. construction projects fell 0.6 percent in December, an $8 billion decline from November levels. Residential construction sunk 1.4 percent and nonresidential building fell 0.4 percent in the final month of 2018. 

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The December construction spending report, which was delayed by the government shutdown, is the latest batch of disappointing economic data from the end of 2018. Retail sales, home sales, housing starts and exports all sunk in December, raising concerns about the long-term strength of the economy.

While the economy grew at a strong 2.9 percent of gross domestic product in 2018, growth slowed to 2.6 percent in the fourth quarter after stellar third quarter (3.4 percent) and second quarter (4.3 percent) rates. The lackluster December data could preview a downward revision to fourth quarter GDP figures.

Economists largely expect the U.S. economy to slow in 2019, due in part to fading stimulus from the 2017 tax-cut and boosts to government spending. Europe and China are also facing severe economic challenges that could also hamper U.S. growth.

In a poll of more than 200 economists released last week, 77 percent said they believed the U.S. would experience a recession within the next two years.

Federal Reserve Chairman Jerome Powell told lawmakers Tuesday that he sees “conflicting signals,” forcing the bank to reconcile a relatively strong U.S. economy with mounting red flags abroad.

“While we view current economic conditions as healthy and the economic outlook as favorable, over the past few months we have seen some crosscurrents and conflicting signals,” Powell told the Senate Banking Committee.

“We will carefully monitor these issues as they evolve.”