U.S. construction spending rose by only a modest two-tenths of a percentage point in April, missing expectations for a half a point gain.
A big drag on construction this month was the unexpected decline in public sector spending, which is less subject to the whims of the market. Usually, when the government—whether its the federal government, a state, or a city—has decided its going to build something, the money gets spent regardless of the prevailing market conditions that might deter private construction.
There’s an important exception to that rule: when a category of government construction is politically charged and control of the government changes hands.
The data from the Census Bureau show that government spending on a category called “public safety” fell 15.2 percent in April compared with the prior month. It is down by nearly 25 percent since January. That is the biggest monthly decline ever recorded.