Digging into Construction Data

1. DiggingintoConstructionData Jeff Crawford NABETeleconference April8, 2010

2. Private Fixed Investment in structures • Useful references on www.bea.gov • 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 • http://www.bea.gov/national/index.htm

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 www.bea.gov • Interactive data tables • Interactive Tables • National Economic Data • National income and product accounts Choose a table from a list of All NIPA Tables 5 - Saving and Investment

5. Investment in structures • Investment inStructures 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 • http://www.bls.gov/ppi/ppinrbc.htm