Going Up

More than 10% of all the money spent in the U.S. goes for new construction, from houses to highways--a fact that makes Americans the buildingest people on earth. Last year an unexpected 6% jump in construction spending was one of the most important factors in the economic advance. Though they expect this pace to slow slightly in 1964, Commerce Department economists look for construction outlays to continue to buoy the economy, rising 5% to a new record of $65.6 billion. In addition to this fresh spending, Americans will pump another $21 billion into the economy just to keep their buildings, roads and homes in good repair.

The biggest impetus to construction lately has been the headlong rush of investors to throw up new apartment buildings in cities, suburbs and practically anywhere they would fit. This eagerness pushed apartment construction up 19% last year, but caused some overbuilding in such cities as New York, Washington, Philadelphia, Los Angeles and Houston. One result: apartment building can be expected to slow up this year, holding the growth of all urban residential construction--which accounts for more than a third of all money spent on building--to a 3% increase v. 8% last year. Construction by businesses, which accounts for a fifth of all expenditures, will rise 4.7%, about the same as last year. Federal, state and local governments will spend about $20 billion on construction in 1964: 9% more will be spent on schools than in 1963, 17% more on hospitals, 48% more on administration buildings and 5% more on highways. Because of the Pentagon's cutbacks, military spending is expected to drop by 8% .

Prefabricated Savings. Government economists predict that 1,640,000 new residences will be started in 1964, 40,000 more than last year. The biggest need for new homes is in the fast-growing West; the East is much more heavily built up, but its market is kept growing by prospering families who are always on the lookout to trade in their homes for more room and more luxury. Fortunately, mortgage loans are still easy to come by, and the trend is for home buyers to avoid the red tape of low-cost FHA or VA loans in favor of straight deals with their banks.

Contractors held the increase in building costs last year to only 2.8%, despite a 4% rise in wages, because they used more prefabricated sections in buildings and more laborsaving equipment. Despite restrictions in many of the nation's 10,000 building codes, contractors hope to save even more eventually by using such innovations as plastic pipe, lightweight sandwich-wall sections for houses, and bathrooms with the facilities molded in a single Fiberglas unit. Builders are not only experimenting with new materials, but with new shapes and concepts (see cover story in MODERN LIVING). One of the most unusual new office buildings is Phoenix Mutual Life Insurance Co.'s Hartford, Conn, headquarters, which is a two-sided, ship-shaped monolith. To shut out the roar of jets at Fort Worth's Carswell Air Force Base, builders are constructing a junior high school that will be entirely underground.

Built-in Growth. Some economists argue that construction moves in cycles all its own and may be due for a downturn, but the evidence to support them is weak; with the exception of one year (1960), total construction spending has marched steadily upward to new records every year since World War II. Even the apartment glut--and many apartment seekers would dispute that there really is one--probably will lessen as more and more new families are formed each year. With such built-in growth ahead, estimates are that construction outlays will increase by two-thirds, to $107 billion, by 1975.

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