The Preconomist

  If you feel like you're running up a down escalator, you aren't imagining it. While mainstream headlines often fixate on nominal dollar records in the broader economy, those of us in preconstruction see a different math. Yesterday's Census Bureau release for December 2025 spending data (finally out after the federal delays) tells a story of a sector that isn't just stalled; it's effectively shrinking when adjusted for the cost of doing business. The Census Bureau noted a 0.3% increase year-over-year in nonresidential spending. When adjusted for escalation, that figure becomes a -3.8% decrease in real spending year-over-year. How long has this been trending downward? We have now hit a somber milestone: overall nonresidential spending, when measured in real dollars, has declined year-over-year for 15 consecutive months. This marks every month since October 2024. In 2023, the industry saw a massive surge that outpaced inflation. But since late 2024, the script ...

  Valentine’s Day is an expensive holiday. While some joke that greeting card companies invented the day to juice profit margins, the current cost of a gift is no laughing matter. Gold prices are hovering near record highs (a topic for a future post), but that heart-shaped box of chocolate will cost you roughly 231% more than it did four years ago. What is driving this "Cocoa-nomics" crisis? To understand the price spike, you need to look at West Africa. Côte d’Ivoire and Ghana produce roughly 60% to 70% of the world’s cocoa. Over the last two years, this region was hammered by record-breaking rains that rotted pods on the trees, followed by a brutal El Niño-driven drought. The 2023/2024 season saw production plunge by 25%, leading to the lowest global yields in decades. This was compounded by a massive spike in production costs. Following geopolitical tensions in 2022, fertilizer prices skyrocketed as Russia and Belarus, two top exporters, were largely sidelined. Many ...

This phrase saw a lot of action on the campaign trail and even during the inaugural address by Donald Trump. Coined in 2018 by Maryland Lieutenant Governor Michael Steel during the 2008 Republican National Convention, Sarah Palin also used the phrase during her vice-presidential debate against Joe Biden that same year. President Trump seeks to boost domestic oil production to lower the cost of crude and the price at the pump. This weekend Trump enacted 25% tariffs on Canada and Mexico, and an additional 10% on China. The Canadian tariffs will only include 10% on energy products. So this means that oil prices are going to come down? Not likely. It is great to implore big oil to produce more product, but based on current data from the U.S. Energy Information Administration, domestic oil production is already at record levels, producing around 13.2 million barrels per day in 2024. Domestic crude oil prices have generally stayed under $80 per barrel since early 3Q24 despite some ge...

Finally some good (enough) news! Last week the ADP jobs report hinted at a cooling off the labor market with a projected 152,000 jobs added. Last Friday the Bureau of Labor Statistics (BLS) reported that an increase of 272,000 jobs while revising March and April numbers down in total by 15,000 jobs (to 310,000 and 165,000 respectively). Unemployment ticked up to 4%, one of the two targets that the fed was hoping to reach. Relating to construction, 21,000 jobs were added in May after a revised total showed no growth in April.   Construction unemployment ticked up to 3.9% versus the 3.7% rate seen a year ago. Most notably though was the continued decrease in job openings which dropped by 8k month over month (m-m) and by 25k year over year (y-y). Hires decreased, also both m-m and y-y, but this does signal any alarms as contractor backlogs stayed flat despite being down by a couple of weeks when compared to a year ago. How can jobs increase so significantly with unemployment a...

Ooh, a storm is threatening My very life today If I don't get some shelter Ooh yeah, I'm gonna fade away Rolling Stones – “Gimme Shelter”   The Consumer Price Index for All Urban Consumers (CPI-U) for April showed a 0.3% increase in April after rising 0.4% in March. That puts inflation at 3.4% year-over-year (y-y), which ticked down by 0.1% from March’s reading, but still above the Fed’s target of 2%. While many of the expenditure categories are in line, there is one pesky category that will continue to be a thorn in the side of the Fed for a while based on current policy. So Inflation Went Down… That Is A Good Trend, Right? Of course, the downward trend is good, but consider that in June of 2023, inflation had plummeted to 3% y-y. Throughout the rest of the year it bounced around before hitting 3.1% in January but has ticked back up since. When you consider all items less food and energy there has been a pretty steady decline over the last year, but that value is st...

"What goes up must come down Spinnin' wheel got to go 'round" - Spinning Wheel - Blood, Sweat & Tears Commodities have been behaving as expected of late. Concrete and masonry have been flat or moving up as expected year to date (ytd). Building materials have reacting to the Fed's hesitating to cut interest rates with lumber. Fabricated steel products continue to decline with steel coil, which had been lagging, taking a more rapid descent in the past months. Even craft/non-supervisory labor has been starting to slow (down to +4.53% y-y versus a reading of +6.76% y-y this time last year) as inflation (CPI-U) has dropped from +4.94% y-y down to +3.48% y-y. So things are finally getting better? Industrial metals though have not followed suit though. The last month has seen a lot of steep price increases on the industrial metal side. - Aluminum: +4.61% m-m; +7.26% ytd - Copper: +7.58% m-m; +17.13% ytd - Nickel: +9.12% m-m; +17.53% ytd - Zinc: +10.33% m-m; +9.52% y...

That can that Quint is crushing is getting more expensive. It has been a busy year so far for aluminum. At the time of this writing (4/21/24), aluminum is up 12.6% month-over-month (m-m) and 20.25% in the last three months. What happened? Last weekend, the US and UK announced a ban on Russian metals affecting aluminum, copper, and nickel. This ban follows suit with the G7’s campaign to curb Russian revenues from crude and petroleum exports. Previous sanctions on Russian metal producers had been in place, but not the blanket bans that now exist. Imports of Russian aluminum had already fallen to zero from tariffs in place in the past. US Treasury officials claim the ban will not have any impact on the pricing of aluminum given the global stockpiles that exist. So we are okay, right? We’ll see about that. While Russian only produces about 6% of global aluminum, 91% of the London Metal Exchange’s (LME) stockpile is Russian aluminum. Any aluminum documented as being traded bef...