I’ll keep today’s report on construction spending brief. The important part of this metric is residential construction spending, another proxy for housing.

On a nominal basis, in March residential construction spending (red) declined -0.4%, while total construction spending (blue) declined -0.5%:

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These are hardly terrible declines.

BUT, the price of construction materials rose a sharp 1.8% in March (probably mainly tariffs on Canadian lumber), so both real total and residential construction spending declined more than 2%:

(Click on image to enlarge)

While these declines by themselves are not recessionary, as demonstrated by 2021’s steep decline, they are both very likely the proverbial tip of the spear of future tariff effects.

So, this morning I have discussed three data points: jobless claims, the ISM manufacturing report, and construction spending. And all of them looked like they might be beginning what will prove to be recessionary declines.

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