Construction and Economic Recovery

Report Outline
Prospect for Expansion of Construction in 1934
Public and Private Construction During Depression
Plans for Promoting Revival of Residence Building
Economic Importance of the Construction Industry
Special Focus

Prospect for Expansion of Construction in 1934

Consideration by the administration of plans to facilitate residential construction improves the prospect for expansion during 1934 of the upward movement in the construction industry that got under way last summer. Before the depression residential building exceeded in value all other separate types of construction, and its decline from 1929 to 1933 was more severe than that of any other branch of the industry. The government sought to counteract the general building decline by initiating a large public works program. Notwithstanding the magnitude of the appropriations voted for this purpose, it was evident that a widespread revival of private building was necessary if the construction industry, as in 1921, was to play a major part in leading the country out of depression. If means can now be found to promote extensive activity in private construction, therefore, the economic effects of the plan adopted should be more far-reaching than those of the public works program.

Estimates of the Federal Employment Stabilization Board indicate that the combined total of private and public construction touched its peak in 1928. The ensuing decline, which began a year before the onset of the general depression, was so great that by 1933 the value of all construction had fallen to less than one-third of the total attained five years earlier. A report covering contracts awarded for building and engineering projects in 37 states east of the Rocky Mountains, submitted to the Public Works Administration in January by the F. W. Dodge Corporation, construction statisticians, disclosed that the turning point was passed in the middle of 1933. The value of publicly-financed contracts in the territory surveyed, which in the first half of the year had been 52 per cent lower than in the corresponding period of 1932, showed in the second half of the year a 21 per cent increase over 1932. Similarly, privately-financed work ran 18 percent behind in the first six months of 1933 but 19 per cent ahead in the second six months.

The greater rate of increase in publicly-financed contracts was largely attributable to initial expenditures from the public works fund. Still greater increases from that source are anticipated in coming months as the public works program gathers momentum. The expansion of activity in private building during the last half of 1933 constituted evidence that the natural forces of recovery were already at work. Private construction, however, has much ground to cover before it returns to anything like normal proportions. Government assistance in speeding its revival would help to prepare the way for eventual discontinuance of extraordinary expenditures for public works.