Construction and Economy are Slow to Recover: Some Reasons Why ....

Our economy has moved from a 60% manufacturing base to a 65% services base.  Looking at the number of jobs (as opposed to output) 70% of jobs are service based.  Martha Olney, adjunct professor of economics at UC Berkeley, argues this translates to slower economic recovery after a deep recession:

We can think of two complementary reasons why a service-dependent economy might experience slower recoveries: goods can be produced in anticipation of demand, and goods can be exported. ... [But] services can’t be inventoried nor, for the most part, exported, services are only produced when domestic demand exists.

Goods-producing businesses are not dependent on domestic demand to increase production as the economy comes out of a recession. They can produce in anticipation of increasing demand or in response to increased external demand. Either way, domestic demand need not increase before goods production increases. Service producers are not so lucky. ....

But we need not simply tolerate longer recoveries as a consequence of the rise of the service sector. We could look to public policy to step in and counterbalance the negative aspects of our current economic climate, as we have in the past. 

Increases public infrastructure spending could play a role here.  But with ARRA expiring and the sequester engineered by Congress just underway, public policy is heading in the opposite direction: 

Federal construction spending is down 28% since peaking in August 2011, when stimulus spending was still going strong, according the Ken Simonson, chief economist o the Associated Genera Contrators of America, an industry trade group. Local governments, particularly school districts, have also been pulling back on construction spending after building a rush of new ones during the housing boom. 

Others worry, that even as the economy picks up, fewer jobs will be created than would have been the case in the past due to increased automation and in efficiency of workers.  I-Pads anyone?