I remember discussing a similar issue before. The decline in U.S. construction spending is primarily a phenomenon caused by high interest rates and weak real estate demand, which is closely related to the current decrease in construction spending and employment.

The core reason for the downturn in the construction industry is the high interest rate environment. The Federal Reserve has maintained high interest rates for an extended period, increasing financing costs. As a result, developers face higher borrowing costs, leading to a reduction in commercial and residential construction starts.

On the other hand, high interest rates have also triggered weak real estate demand. The 30-year mortgage rate once exceeded 7%, suppressing home-buying demand and consequently affecting new residential construction.

Moreover, the troubles in commercial real estate may be even greater, with high vacancy rates in office buildings and reduced investment in development and renovation. All of these factors contribute to the decrease in construction spending, while also signaling an economic downturn.

However, the root of all this still lies in high interest rates. Although lowering rates may not necessarily reverse the situation, it can certainly delay economic issues. This is one of the reasons why Trump has consistently emphasized the need to cut interest rates.

Looking at nearly 50 years of U.S. history, this situation has almost only occurred during periods of economic recession, except for 2018.

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