Revised data and census construction data for the second quarter of 2023:
figure 1: Manufacturing Construction, $1 billion per month in 2017 (blue) and Manufacturing Structural Investment, $1 billion per month in 2017 (tan), both on a logarithmic scale. Materials and parts for the construction industry declined due to the Producer Price Index (PPI). NBER-defined recession peak-to-trough dates are in gray. source: census, Get BLS through FREDBEA (3rd edition, 2023 Q2), NBER, and author’s calculations.
It is worth noting that these data are plotted on a logarithmic scale. If viewed from a horizontal perspective, the jump in manufacturing structural investment is even more significant.
In the first half of 2023, the accounting contribution of NIPA’s manufacturing structural investments was quite impressive.
figure 2: Contribution to quarter-on-quarter GDP growth of all categories, excluding manufacturing structural investment (tan) and from manufacturing structural investment (blue), on an annualized basis. Source: BEA 2023 Season 2 Edition 3.
While nonresidential (gross) structural investment contributed 0.46 percentage points to second quarter GDP growth (SAAR) of 2.1 percentage points, as of today’s GDPNow, the component’s contribution to the forecast third quarter growth of 4.9 percentage points was 0.02 percentage points.
Thus, the CHIPS Act appears to have stimulated investment in nonresidential construction. Congressional Budget Office Transfer infrastructure spending to states using a multiplier between 0.4 and 2.2. The midpoint of this range is 1.3. This suggests that about half a percentage point of growth in the first half of 2023 (on an annualized basis) can be attributed to the stimulus from this measure.
This is a separate question from whether the CHIPS Act is a good idea as industrial policy. Those factories still need to be staffed and wafers are actually produced.
