A recent construction report revision suggests a negative revision to GDP. 
December 2025 Construction Spending
- Total: +0.3 percent
- Nonresidential: -0.5 percent
- Residential: +1.5 percent
- Public: -0.5 percent
- Private: +0.5 percent
- Commercial: -0.4 percent
The jump in residential is interesting. But the net was an expected 0.3 percent rise.
Construction Spending Revision
Chart courtesy of Bloomberg Econoday.
In isolation, I would expect that -0.6 revision to construction spending to take about 0.1 percentage points off overall GDP.
However, things are not in isolation.
There might be more revisions, in either direction, to every GDP component.
But with the economy generally weakening, other revisions rate to be negative as well. That is reason number two.
Weakening Construction Spending
Construction spending generally peaked in May of 2024.
Construction Spending Commercial and Manufacturing
There is no boom in manufacturing construction, and there doesn’t rate to be. Tariffs are a failure.
Since June 2024, manufacturing construction is down from 240.09 billion to 202.42 billion. That’s a decline of 15.7 percent.
Construction Spending Year-Over-Year Percent Change
Year-over-year construction went negative in the fourth quarter of 2024 and generally stayed there.
Bear in mind those are nominal numbers. It’s real (inflation-adjusted) numbers that add or subtract from GDP.
Year-over-year real numbers have been consistently negative since October of 2024.
Looking Ahead Factors
- The labor market is weakening dramatically
- With the war in Iran, gas prices could soar and stay there if the war is prolonged.
- Expect inflation pressures due to health care insurance.
Other than AI spending there is little to cheer about. And AI rates to take jobs. Things look stagflationary. But for now, the bond market disagrees.
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“Things look stagflationary. But for now, the bond market disagrees.”
The bond market is slowly “catching up” this week.
Last year GDP grew by $1.481 trillion.
https://fred.stlouisfed.org/series/GDPA
The deficit for calendar year 2025 was $2.296 trillion
Debt to the Penny | U.S. Treasury Fiscal Data
Deficit spending now exceeds benefit suggesting it is no longer economically stimulating for the government to spend beyond its revenue. Further reducing the deficit only prolongs our eventual fiscal demise, as the debt continues to grow unless the deficit is completely eliminated. Gimmicks like reducing the dollar purchasing power do not reduce the deficit, only reducing spending below revenue works.
Reducing the dollar purchasing power is the ONLY way US is getting out of debt and they plan on it. They’ll print and reduce purchasing power by inflating the currency. Can do that for a long time as long as 1/Dollar is reserve currency backed by 2/US Military and 3/There is a peaceful transfer of power. Oooopsie…getting to the FO part of FAFO.
Operation Epstein Fury
perpetrated by the ‘Coalition of the Willing Epstein Cohorts’
Money flows have peaked. But there is an excess of savings over real investment outlets.
Mish, I know it’s not related to this post but do you mind if I ask – what is happening with gold? Is this a temporary blip because large investors need to sell something to cover losses in the stock market? If so, I’ll buy into a gold ETF temporarily.
Btw I bought physical gold years ago on your advice, at around $800 to $1,000 an ounce. Seems like forever ago. We sold it last year for a very tidy profit. Would have been better to sell it now, but who knew? The dollar debasing has been extraordinary in the last year. Anyway thank you. – A rural Wisconsin cheese worker
[Not Mish] Gold is a hedge against hot economic prints. It’ll skyrocket in nominal terms when Cheetolini gets the new Fed chair to print baby print! Give it 4 months or so.
IMO gold is a hedge against soft default (inflation) and hard default alike. Demand for it reflects a lack of faith in the regime.
I lived through the Vietnam era and was forced to serve in the military. I recall LBJ saying, “American boys shouldn’t do what Asian boys should do for themselves” and General Westmorland saying another 50,000 drafted troops would do the job. He could see the light at the end of the tunnel. My Dad told me FDR said American boys would never fight on foreign soil. He was drafted shortly after that. Politicians will say anything to get elected, and the military rarely tells the truth. Beware, this fiasco will cost us all in one form or another.
FDR did everything imaginable to manipulate the US into WWII after saying that. Severe economic war on Japan, embargoing oil and stealing their assets in the US and not even answering their summer of ’41 peace efforts (in fact keeping them secret)…having US destroyers fire on German subs to try to get them to “strike first”. FDR, LBJ, and Trump were 3 of a lying kind.
This hyper-extended, overblown economic bubble looks ready to undergo the largest correction in my lifetime (80 yrs). A brilliant analysis of the impact of the loss of insurability in energy is multi-faceted, and far more potent than real estate exposures to fire, drought, crime…just hit my inbox. Long and scary. https://shanakaanslemperera.substack.com/p/the-invisible-siege-how-insurance
Excellent article and very true. I have been pointing out the insurance conundrum here for years and not just the “war” premium. One sunk oil tanker with $100m of oil can bankrupt insurers in no time.
The “climate hoax” is causing home owners insurance to sky rocket. There were fires in Oklahoma this year…Oklahoma!
Florida, Texas and the gulf coast get hammered by hurricanes frequently and more building continues and insurance goes higher. FEMA recently re-did their flood maps and our home is now in the 500 year flood plain, I think it’s a scam to raise premiums for everyone.
Then you have health insurance which is a mess. This whole thing is not sustainable anymore and we have 80m seniors being subsidized by everyone else, not workable.
Auto insurance rates were skyrocketing because of EVs – best thing to do is dump your car if you can.
Is it just climate change or perhaps also what we have done to the surface of the earth to denigrate its ability to handle severe rain events? You can’t concrete/asphalt over the ground, cut down millions of acres of trees, permit billions of dump truck -sized loads of topsoil to wash down the Mississippi River into the Gulf, build houses everywhere, then just point to changes in weather patterns as the reason why beaches are eroding and why billions upon billions of dollars of property are damaged from severe flood events. We have significantly altered the ability of the earth to slow, sink, and spread water.
THAT IS AN EXCELLENT HYPOTHESIS.
I don’t know how true it is without data (that I can trust). But IMHO your idea should be investigated. (Probably it is. But I haven’t checked.)
I’m not actually interested in researching it (for lack of time) or even reading about it (because this stuff is so politicized I won’t trust any claims). Nevertheless, thank you for a little dessert for thought.
It’s simple physics. Warmer oceans experience more evaporation. A warmer atmosphere holds more water vapor. Meaning, it hunts water. The atmosphere is becoming voraciously thirsty. The problem is the amount of water in modern precipitation events. Storms in the Gulf of Mexico gather up gigantic amounts of water vapor. It precipitates out in around 9 days. The Gulf of Mexico will be forming gigantic water balloons – trillions of gallons of water – and randomly tossing them at the former Confederacy for the next 100s of years. The Holocene is when our infrastructure was built and up to its job. It’s over. We are in the Anthropocene, and our infrastructure and financial systems are wholly inadequate. Life will be much harder. Keep electing idiots like the current crop of Republicans in Washington DC and Red-State governments, and it is going to be even harder. A significantly greener American West can no longer feed as many cattle as a browner American West did in the 1970s. So two steaks cost $55. Wonder why? Read scientific papers.
I recall reading that yesterday – that the Strait was still open, but the ins companies told the tankers to stay in port.
Climate isn’t static. The Dust Bowl happened in Oklahoma in the 1930’s, then ended. Climate got colder through the 1970’s. Climate alarmists ignore that. Climate alarmists ignore that a new record 12 years without a major hurricane hitting the U.S., occurred after Katrina. Climate is being politicized.
The Southwest U.S. has been a desert, since before Europeans colonized it. There have been long stretches of extreme drought, before. Last rainy season L.A. had virtually no rain until after the January fires. This season we have 18 inches, 3 above normal for the entire year, with an exceptionally rainy October-January 1.
The dust bowl was also caused by human activity. It ended when that activity did. Not a great example.
Great article
Best line
“The world’s most important energy chokepoint is not closed by force. It is closed by spreadsheet.”
No worries though Cheetoburger took all this into account…and Bibi told him not to sweat the little details.
If the Iranians understand this, they don’t have to do anything.
“The boys will be home before Black Friday!”
Problem solved…spec traders blown out
Trump Announces US To Cover Insurance For All Ships Traveling Through Gulf, Will Provide US Navy Escorts
https://www.zerohedge.com/political/oil-tumbles-trump-floats-insurance-tankers
Dow, S&P futures down, Oil up 6%!
It’s gonna be a beautiful day!
Trump in the voice of the witch from Wizard of Oz:
“Oh no…not the the Dow Jones, my precious Dow Jones…”
The Dow isn’t at 50,000 so I guess we can prosecute those pedos now.
Pedos? What pedos? Don’t you know we’re at war?
3/3/2026 10 am
the DJI, S&P and NASDAQ are all down over 2%. “Jump you fuckers” rings through my memory……lol
Of course before the end of the day it will be back to positive territory.
Obviously missing the green shoots
LOLz