Construction Spending & Employment

Not much change in Construction Spending since the last update.  What's interesting is that Calculated Risk added Public Construction Spending to this month's chart.

Public Construction Spending was on a steady uphill climb since the inception of this chart.  A steadily producing economy allowed the Gov't spend and spend on construction projects.  Once the financial crisis hit, stimulus was the order of the day.  What's surprising is that the bump in public construction spending was pretty pathetic.  Most of the stimulus was directed towards financial entities (and it is very hard to discern the benefits that resulted) so investment in long lasting infrastructure improvements were passed over.  Public construction spending peaked in 2009 and has tapered off since then.  The prospects for future public construction spending look pretty glum.  "Super-Congresses" have been formed to determine ways to reduce the cost of government.  Tea-Party enclaves are adamantly against more spending.  It appears unlikely that any significant stimulus will be coming to pay for public construction spending.  It's worth mentioning that a  favored method of financing public construction spending, Build America Bonds, expired on 12/31/2010.  Even if taxpayers were willing to pay for additional public construction spending, a preferred method of financing it is gone, not to return.  I expect public construction spending to fall to early 2000's level of $200bn ($75bn from today, about 25%).
Ignoring the spending explosion on residential construction between 2004 and 2007, residential construction spending is down about 40%.  Non-residential is also down 40% from the peak. 

The following chart shows employment trends in the construction industry.

This chart shows all construction related employment.  The number of jobs in the construction industry have fallen by over 2,000,000 since 2007.  It appears that the job losses have been fairly even amongst residential & non-residential (spending is down about 40% for each).
So, what's the outlook?

Residential starts might have stabilized.  New home inventories are scraping along at rock bottom.  It's hard to imagine housing starts dropping much further.  On the other hand, Apartments are in hot demand.  Apartments started this year will provide construction spending over the next year and a half. 
I don't expect much improvement in non-residential spending over the next year, until employment increases, but it is already 40% off peak spending.  Non-residential contruction spending could fall another $50bn from current levels, unless employment improves.  But I suspect a lot of the employment impacts have already been incurred.
If public construction spending decreases by $75bn, can residential spending increase by over $75bn to absorb the workers displaced by decrease in spending on public projects?  I think so.  I'm not suggesting a hiring binge, but I believe the construction industrie's drag on employment is nearing an end.