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Parting Ways

From 2019 through April 2020 residential and commercial construction followed the same path. 

Both were on a decline already in 2020 then Covid accelerated the pace. 

In June of 2020, the recoveries in residential and commercial construction parted ways. 

It's easier to spot with year-over-year comparisons.

Construction Spending Year-Over-Year

Construction Spending Year-Over-Year for 2020-11

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Note the great parting of ways ahead in 2006 of the Great Recession. It's a reverse setup now with residential leading.

Fed's Response in Play

What's happening now reflects Covid and also the Fed's response to it. 

Interest rates are the lowest in history thanks to the Fed. 

Commercial, especially malls, were already in a bad spot given trends in online shopping.

Covid amplified online shopping trends as well as the need for less office space due to increased work-at-home arrangements.

Mish