U.S. builders cut their spending on construction projects in September, the second straight monthly decline. Much of the decrease came as government spending for schools, sewers and transportation projects tumbled — part of a broader yearlong decline as infrastructure funding has become a key policy issue in the presidential election.
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The Commerce Department said Tuesday that total construction spending fell 0.7 percent in September to a seasonally adjusted annual rate of $1.15 trillion. Publicly-funded construction dropped 0.9 percent to an annual rate of $270.3 billion. Over the past 12 months, government construction has slumped 7.8 percent — a decline equal to nearly $23 billion.
Still, there was positive news in the report as construction spending for August and July were revised upward. This led many economists to increase their estimates of third-quarter growth from the annualized 2.9 percent reported recently by the government to 3 percent.
Both Hillary Clinton and Donald Trump have pledged to revive infrastructure funding if elected president. By reforming the business tax code, Clinton would provide an additional $250 billion in direct funding over five years and found a new infrastructure bank with $25 billion. Trump would rely on new tax credits for infrastructure, with the campaign projecting an additional $1 trillion being spent over 10 years.
The outlook for infrastructure spending has deteriorated this year despite interest rates near historic lows, making it cheaper for the government to borrow and investment in facilities that can help long-term economic growth.
Between August and September, spending on school buildings fell 1.1 percent. Sewage and water project plunged 5.4 percent. Transportation spending fell 0.9 percent, while park-related building decreased 3.2 percent. Spending specifically on highways and roads did improve in September, although that figure has dropped over the past year.
Private construction spending, which makes up the bulk of expenditures, has been less of a drag. It slipped 0.2 percent in September as construction spending on factories, commercial spaces and utilities declined.
Gains in homebuilding offset some of this decrease. Residential construction spending has climbed 0.9 percent over the past 12 months to $453.7 billion as low mortgage rates and a solid job market has increased demand for housing.