
Phyrex|Sep 07, 2025 18:48
I remember we talked about a similar issue before. The decline in U.S. construction spending is mainly a phenomenon caused by high interest rates and weak real estate demand, which is closely related to the current drop in construction spending and employment.
The core reason for the downturn in the construction industry is the high-interest-rate environment. The Federal Reserve's prolonged high rates have driven up financing costs, increased borrowing costs for developers, and reduced the start of commercial and residential projects.
On the other hand, high interest rates have also weakened real estate demand. The 30-year mortgage rate once exceeded 7%, suppressing home-buying demand and indirectly affecting new housing construction.
Moreover, the situation in commercial real estate might be even worse. Office vacancy rates are high, and investment in development and renovation has decreased. These are all reasons for the reduction in construction spending and also signals of an economic downturn.
But the root of all this still lies in high interest rates. While lowering rates might not completely reverse the situation, it would certainly slow down economic problems. This is one of the reasons why Trump has consistently emphasized the need for rate cuts.
Looking at the past 50 years of U.S. history, aside from 2018, this kind of situation has almost only occurred during periods of economic recession.
This article is sponsored by Bitget | @Bitget_zh
Share To
Timeline
HotFlash
APP
X
Telegram
CopyLink