Government Construction Spending Tumbles to 2007 Levels

Federal government outlays for construction fell at their fastest pace on record in 2013 as lawmakers cut spending in their long-running budget war.

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The U.S. government’s spending on construction tumbled 14.2% to $23.49 billion in 2013, the Commerce Department said Monday. That was the sharpest decline in records dating back to 1993, enough to return spending to 2007 levels.

Washington’s clash over government spending took a bite out of federal expenditures last year. A series of cuts known as the sequester slashed spending by tens of billions of dollars early in the year, until a deal to restore some of the reductions this year.

Spending by state and local governments, which account for a much larger portion of total construction expenditures, fell by 1.6% to $247.69 billion last year. That was more than the 1.2% decline for the category in 2012, but less than the 6.6% drop in 2011.

Weakness in government-construction spending was offset by a surge in spending by private home builders. Private residential investment rose by 18% to $330.72 billion as the housing rebound gained steam last year. That was the strongest gain since 2004.

Total construction spending rose by 4.8% to $898.37 billion in 2013.