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Loren Faulkner

Early 2009 Construction Forecast
October 15, 2008

I just finished listening in on Reed Construction Data’s 2009 U.S. Construction Outlook. The speakers were Jim Haughey, Chief Economist, Reed Construction Data and Suzanne Mulvee, Senior Real Estate Economist, Property & Portfolio Research (PPR). The entire one-hour webcast is complimentary and can be accessed at www.reedconstructiondata.com

But in the mean time, here are some key highlights of what is being predicted overall:

Outlook Summary

•US economic growth sub-par through 2010 with recession into next year

•Restricted credit access and high costs restrain investment spending

•Two + year decline in US construction activity ends –but recovery is slow

•Commodity price surge is over but construction materials inflation exceeds overall inflation

Economic Activity Index –last three months (Aug) vs. year ago

•Gulf Coast1.0%

•Mid-Atlantic -1.1%

•New England-1.4%

•South Atlantic-1.5%

•Pacific -2.1%

•Plains-2.5%

•Rocky Mountain-2.4%

•Great Lakes-3.2%

•Source: Philadelphia Federal Reserve Bank

Economic Environment for Construction

•Recession into winter then subpar GDP

•Recession level spending confidence

•Rising lending rates and tightened standards

•High construction materials costs

•Lower expected commercial project returns

•Funding adequacy problems for highways (now) and public buildings (soon)

•Surplus of existing residential units for sale

•All of these constraints by the end of 2009

Posted by Loren Faulkner on October 15, 2008 | Comments (0)