Data from 2023Q2 post-revision, and Census construction numbers:

Figure 1: Construction in manufacturing, in bn 2017$ per month (blue) and investment in manufacturing structures, in bn Ch.2017$ per month (tan), both on a log scale. Construction deflated by PPI in material and components for construction. NBER defined peak-to-trough recession dates shaded gray. Source: Census, BLS via FRED, BEA (2023Q2 3rd release), NBER, and author’s calculations.

It’s important to note that these data are drawn on a log scale. The jump in manufacturing structures investment is even more dramatic if shown in levels.

The accounting contribution of investment in manufacturing structures in the NIPA is quite striking in 2023H1.

Figure 2: Contribution to quarter-on-quarter growth at annual rate of GDP from all categories ex-manufacturing structures investment (tan), from manufacturing structures investment (blue). Source: BEA 2023Q2 3rd release. 

While nonresidential (total) structures investment contributed 0.46 ppts of Q2’s 2.1 ppts GDP growth (SAAR), GDPNow as of today has this components contribution at 0.02 ppts of Q3 nowcasted 4.9 ppts growth.

So, the CHIPS Act seemingly has spurred nonresidential structures investment. CBO uses a multiplier for transfers to states for infrastructure spending between 0.4 to 2.2. The midpoint of this range is 1.3. This suggests around half a percentage point (at annual rates) of 2023H1 growth can be attributed to the stimulus coming from this measure.

This is a separate issue from whether the CHIPS Act, as a type of industrial policy, is a good idea. Those factories still have to be manned, and the chips actually produced.

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