Capitol Update 7/17/2023
US Consumer Inflation Continued To Slow Sharply In June
Reuters reports that US consumer prices “rose modestly in June and registered their smallest annual increase in more than two years as inflation subsided further, but probably not fast enough to dissuade the Federal Reserve from resuming raising interest rates this month.” According to data released by the Department of Labor, the Consumer Price Index in June was up 3.0% over the previous year, “the smallest year-on-year increase since March 2021 and followed a 4.0% rise in May.” CNBC reports the CPI was up 0.2% over May. However, the core CPI, which excludes volatile food and energy prices, was up 4.8% from a year ago and 0.2% over May. The AP reports, “Over the past two months, inflation has slowed rapidly – from nearly 5% in April to just 3% now. Much of that progress reflects the fading of big spikes in food and energy prices that followed Russia’s invasion of Ukraine last spring. Other major drivers of higher prices, though, are also beginning to fade,” such as used car and rental prices. Bloomberg calls the new numbers “a major step toward ending the cost-of-living emergency – and possibly the Federal Reserve’s historic monetary tightening, too.” The Washington Post reports, “The latest data reflects a drastically different economic picture than June 2022, when inflation soared to 9.1 percent, just months after Russia’s invasion of Ukraine sent energy prices soaring. Part of the reason that this June’s inflation figure dropped so much is that the yearly data compares against last year’s peak. The energy index, for example, which drove inflation for much of last summer, is now down 16.7 percent for the 12 months ending June.”
New Numbers May Boost Chances Fed Stops Rate Increases After Expected July Hike
The New York Times says, “Slower inflation is unquestionably good news, because it allows consumer paychecks to stretch further and inflicts less pain at the gas pump and in the grocery aisle. But Federal Reserve officials are still trying to assess whether the cool down is likely to be quick and complete. They do not want to allow price increases to linger at slightly elevated levels for too long, because if they do, consumers and businesses could adjust their behavior in ways that makes more rapid inflation a permanent feature of the economy.” The Wall Street Journal says that the new data raises the chances that the Fed will stop raising interest rates after this month’s “expected” increase.
Multiple Federal Reserve officials have indicated that more interest-rate hikes will be needed to continue bringing inflation under control, while suggesting that the central bank might be nearing the end of its tightening cycle. “We’re likely to need a couple more rate hikes over the course of this year to really bring inflation back into a path that’s along a sustainable 2% path,” said Mary Daly, president of the Federal Reserve Bank of San Francisco.
Construction groups say a Biden administration proposal to undo Trump-era changes to the Endangered Species Act could lead to costly delays in projects. The proposal comes as protections are reinforced and as agencies gain greater authority to list species driven by climate change to move outside normal habitats, a change that reportedly could restrict road construction.
A report from the Bureau of Labor Statistics shows construction employment rose again in June, with 23,000 jobs added, beating the average monthly increase of 15,000 this year. More than 6,000 jobs were added in central Ohio during the 12 months through May, thanks to major projects from entities such as Intel and Ohio State University. Full Story: Yahoo The Columbus Dispatch (Ohio) (tiered subscription model)
A 10.5% decline in institutional planning contributed to a 2.5% drop in the Dodge Momentum Index in June compared with May, even as the commercial component rose 3.1%. Activity in the institutional category “pulled back from the robust highs of the last three months but continued to dwarf year-ago levels,” while “growth in the commercial segment may be fleeting, as the continued elevation in interest rates and increasingly tight lending standards weigh down the sector in the latter half of the year,” says Sarah Martin of Dodge Construction Network. Full Story: Dodge Data & Analytics
Construction teams spend much time developing ad hoc solutions outside their skill areas, and many workers spend more than 10 hours weekly chasing data across technologies, according to a report by Quickbase, which makes project-management software. “The promise of digital transformation isn’t happening the way it was intended, and employees are frustrated, and organizations are losing money,” Quickbase CEO Ed Jennings says. Full Story: Construction Dive
AECOM President Lara Poloni says that hard-won progress on diversity has greatly changed the construction industry since she entered it 30 years ago but that more progress is needed. “For the next generation of infrastructure to be equitable and sustainable, we can’t afford to ignore the diversity,” Poloni says. “Instead, we must embed as many perspectives as possible into our work.”
Full Story: Construction Dive
PPI for final demand advances 0.1% in June; services rise 0.2%, goods unchanged
The Producer Price Index for final demand increased 0.1 percent in June. Prices for final demand services rose 0.2 percent, and the index for final demand goods was unchanged. Prices for final demand advanced 0.1 percent for the 12 months ended in June.
CPI for all items rises 0.2% in June; shelter up
In June, the Consumer Price Index for All Urban Consumers increased 0.2 percent, seasonally adjusted, and rose 3.0 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.2 percent in June (SA); up 4.8 percent over the year (NSA).
Confidence in the construction market has remained steady, but concerns about the short- and medium-term future lowered Engineering News-Record’s Construction Industry Confidence Index by 4 points in the second quarter. The index reading of 40 reflects survey results showing that 40.1% of executives expect the market to soften in three to six months and that 33.3% of executives predict softening in 12 to 18 months.
The Energy Department has allocated $90 million to local authorities in 26 states and in Washington, D.C., to update energy codes for homes and businesses. The department estimates that upgrading to model codes will decrease utility bills by $138 billion by 2040 and will slash carbon dioxide emissions.
Full Story: The Construction Broadsheet
AGC of America wants to understand exactly how labor shortages, supply chain challenges and inflation are impacting the construction industry. That is why we are asking you to take a few minutes to complete a workforce survey that we and our partners at Autodesk have prepared. The more people understand the scope, and consequences, of current labor market conditions, the more likely we will be able to convince public officials to enact measures to help meet the industry’s needs. In other words, the more members who take the survey, the better able we all will be to describe labor market conditions where you operate.
A plan to remove four hydroelectric dams along the Klamath River has advanced with removal of the first dam. Kiewit is the lead contractor for the project along the Oregon-California border, the biggest-ever dam removal nationwide. Full Story: Jefferson Public Radio (Ashland, Ore.)
Yosemite Clean Energy plans to build a $250 million green hydrogen plant in Oroville, Calif. The plant, which will use forest biomass as feedstock, has received a $5 million grant from the California Energy Commission. Full Story: KHSL-TV/KNVN-TV (Chico, Calif.)
A plan for a Ceres-to-Turlock extension of California’s Altamont Corridor Express has gotten a boost from a $40 million state grant. The extension is part of a $1.8 billion expansion of the rail service into Stanislaus, Merced and Sacramento counties. Full Story: The Modesto Bee (Calif.)
A 12-year, $1.7 billion upgrade of a wastewater conveyance system and treatment facility for the Sacramento, Calif., region is complete. The EchoWater Resource Recovery Facility project has been delivered on time and under budget to serve a delta formed by the Sacramento and San Joaquin rivers and to meet stricter wastewater discharge requirements imposed in 2010. Full Story: Civil Engineering