Forecast For 2020 Is Definitely Not 20/20

By Greg Sitek

Forecasting usually uses a crystal ball for an all-inclusive overview, or a telescope for a long-range view, or a microscope for a finite, specific pinpoint view.

For 2020 a kaleidoscope is probably the correct instrument to use since forecasting anything with respect to the coming year is a virtual impossibility. Typically, there is the “what if” factor that points predictions in one direction or another. For 2020 there are more “what if” factors that stable ones.

Making predictions for the coming year are like shooting the ball in a pinball machine – you just don’t know where it’s going to go, what obstacles it’s going to hit, which direction it’s going to be forced into traveling. 

However, for the construction industries, there are a couple of certainties that will remain constant. For Example, March 10 through 14 ConExpo will be held in Las Vegas, Nevada and will be the biggest construction show ever with 2,800 exhibitors, 2,500,000 square feet and 150 education sessions.  

For our industries this is where I stop with the predictions. There are numerous bills, proposals, agreements, treaties, etc. waiting to be reviewed, revised, rewritten in and before congress waiting for congressional action all of which will have an impact not only on construction but our entire economy. 

According to Dodge Outlook Report we can expect an economic slowdown that will affect total construction growth.

Dodge Data & Analytics released its 2020 Dodge Construction Outlook, a mainstay in construction industry forecasting and business planning. The report predicts that total U.S. construction starts will slip to $776 billion in 2020, a decline of 4% from the 2019 estimated level of activity.

“The recovery in construction starts that began during 2010 in the aftermath of the Great Recession is coming to an end,” stated Richard Branch, Chief Economist for Dodge Data & Analytics. “Easing economic growth driven by mounting trade tensions and lack of skilled labor will lead to a broad based, but orderly pullback in construction starts in 2020. After increasing 3% in 2018 construction starts dipped an estimated 1% in 2019 and will fall 4% in 2020.”

“Next year, however, will not be a repeat of what the construction industry endured during the Great Recession. Economic growth is slowing but is not anticipated to contract next year. Construction starts, therefore, will decline but the level of activity will remain close to recent highs. By major construction sector, the dollar value of starts for residential buildings will be down 6%, while starts for both nonresidential buildings and non-building construction will drop 3%.”

In Contrast, AEM’s 2020 Outlook for Construction predicts “Steady and solid growth is likely to continue for the construction sector. As the second-largest in the world (behind China), the U.S. construction market is poised for 3.3 percent growth this year, 1.7 percent growth in 2020, and somewhere between 1.5 and 2 percent growth for the next five years. Residential construction remains a strong driver – it represents about 40 percent of the total market and, in the last four years, it’s seen double-digit growth. However, as of late, growth has slowed considerably.

“A lot of the optimism we saw in 2017 and 2018 seems to have evaporated,” said AEM Director of Market Intelligence Benjamin Duyck. “There really is no consensus to what the future truly holds.”

Tariffs are playing a role in the uncertainty, as is the need for a new comprehensive infrastructure package.

“Both political parties discuss this quite a bit, but nothing has materialized so far,” said Duyck. “It’s now expected for 2021 – and hopefully it comes soon, as most of the infrastructure spending, we see today occurs at the state and local level.”

“While the outlook for construction remains positive, enough factors are having a negative impact that uncertainty is still pervasive for the time being.”

AEM’s bottom line – “2019 has been a solid year for the economy overall, as well as the ag and construction sectors. A number of factors – global trade wars and protectionism being chief among them – are leading to increased concern that a recession is right around the corner. And while that likely isn’t the case, it’s not unreasonable to suggest one may arrive by 2021.”

Another certainty, there is an election scheduled for November 3, 2020 and there is more on what to expect in the January issues of the ACP magazines. We do have some excellent forecasts for you.

December 2019

By Greg Sitek 

December is many things…

Probably the busiest month of the year. Certainly, one of the most traveled with the holiday shopping, visits and celebrations. It’s also that time when we start collecting the detailed information that goes into closing out the year’s activities – domestic, business and work related. It’s that time when circumstances force us to reflect on our lives as we gather the information and details to do these things. 

How has construction done for the year?

Actually not bad… According to the The Dodge Momentum Index it increased 6.9% in October to 152.6 (2000=100) from the revised September reading of 142.7. The Momentum Index, issued by Dodge Data & Analytics, is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. October’s increase was due entirely to a recovery in institutional planning projects, which had stepped back over the previous few months. Institutional planning moved 22.8% higher in the month while commercial planning lost 0.5%. 

Despite the October increase, institutional projects entering planning remain 4.3% lower on a year-over-year basis compared to October 2018. Commercial projects meanwhile are 14.3% higher than October 2018 as several mega projects have entered the early stages of planning over the last several months. The overall Momentum Index is 6.7% higher than a year ago, although its level remains below the July 2018 peak.

In October, 24 projects each with a value of $100 million or more entered planning. The leading institutional projects were the $470 million Orlando Health Hospital in Lake Mary FL and a $356 million renovation project at the Rockrimmon Elementary School in Colorado Springs CO. The leading commercial projects were a $250 million office building in Brooklyn NY and the $188 million Spirit Airlines Headquarters in Dania Beach FL.

As for our highways, there is or soon will be a bill in the senate for a new bill meanwhile, according to ARTBA The Senate passed a bundle of – FY 2020 spending bills, H.R. 3055 including one funding the U.S. Department of Transportation programs – in a modest sign of progress toward implementing full-year spending levels before the current spending law expires Nov. 21.  The House passed its version of the package June 25.

The Senate-passed legislation contains full-funding at authorized levels for highway and airport construction programs but falls short for public transportation capital grant programs.  Following recent precedent and in accordance with the two-year bipartisan budget agreement reached in July, the legislation also includes additional funding from the General Fund on highway, transit and airport programs beyond the authorized spending levels. More information available at 

http://www.site-kconstructionzone.com/?p=17393

While the new highway bill still remains a “wishful thought” Voters in 19 states Nov. 5 sent a decisive message of support for transportation investment, approving almost 90 percent of 305 state and local transportation ballot measures, also according to ARTBA.
 
In total, the 270 approved initiatives are expected to generate over $9.6 billion in one-time and recurring revenue, according to the analysis conducted by the American Road & Transportation Builders Association’s Transportation Investment Advocacy Center™ (ARTBA-TIAC). Two measures in Texas are still pending.
 
“The ballot results are a great reminder infrastructure investment remains one of the few areas where red states, blue states, Republicans and Democrats can all come together,” ARTBA President Dave Bauer said.  “It should also demonstrate to lawmakers on Capitol Hill that the public will be on board for the passage of a long-term bill that significantly boosts highway and transit investment at the federal level.”
 
A complete report and an all-new interactive dashboard that filters results by state, mode, year and type of initiative are available at the Center’s flagship website: www.transportationinvestment.org or http://www.site-kconstructionzone.com/?p=17400

And, AGC reported similar good news, Construction employment increased by 10,000 jobs in October and by 148,000, or 2.0 percent, over the past 12 months, while construction spending decreased by 2.0 percent from September 2018 to September 2019, according to an analysis of new government data by the Associated General Contractors of America. Association officials said demand for construction is being undermined by uncertainty and tariffs that are part of a series of trade disputes with China, the European Union and other countries.

“The construction industry is still adding workers at a faster clip than the overall economy but growth has slowed as private nonresidential and multifamily construction spending shrinks,” said Ken Simonson, the association’s chief economist. “At the same time, public investment and a recent pickup in single-family homebuilding have helped employment to grow.” See full report at https://www.agc.org.

As we close the books on 2019 we can look back a say, “It really wasn’t a bad year for the industry and the economy.” Of course that begs the question, “What will 2020 look like?”  We’ll have to wait and see. Meanwhile, enjoy the holiday season and have a Merry Christmas and Happy New year.

As Summer fades

By Greg Sitek

It’s hard to believe that Summer 2019 is fading into history. We are one step closer to a new transportation bill as theSenate’s America’s Transportation Infrastructure Act (ATIA) Committee on July 30 unanimously approved the America’s Transportation Infrastructure Act (ATIA), legislation introduced July 29 by EPW Committee Chairman John Barrasso (R-Wyo.), Ranking Member Tom Carper (D-Del.), Transportation & Infrastructure Subcommittee Chairman Shelley Moore Capito (R-W.Va.) and Subcommittee Ranking Member Ben Cardin (D-Md).  If enacted, the measure would significantly increase funds for highway and bridge improvements from FY 2021 through FY 2025.

According to reports from the American Road & Transportation Builders Association, ARTBA, “The Senate proposal represents the first program reauthorization bill in nearly 15 years that would significantly increase federal investment in highway safety and mobility improvements.

“The committee’s early action is a critical first step in the lengthy legislative process.  It’s also a welcome departure from the series of extensions and years of delay that have plagued the last few surface transportation bills.

“We urge the Senate Commerce, Banking and Finance Committees to take timely action early this fall on their respective policy and financing components of the measure.  Final passage of a bill this year provides a meaningful opportunity for members of Congress and the Trump administration to deliver on the infrastructure investment promise they have been making since the 2016 elections.”

The current FAST Act highway and transit investment law expire Sept. 30, 2020.

There have been reports from Washington that Senate is anxious to have the ATIA passed this year. In some of the articles, I’ve read a target date as early as this September has been suggested. Hopefully, it will get through Congress faster than the FAST Act.

In addition to transportation infrastructure getting attention, the Trump administration recently  announced three regulatory measures with significant impact for highway and heavy construction:

  • The Occupational Safety and Health Administration published a request for information asking the regulated community to help clarify various aspects of the crystalline silica rule.
  • The Federal Motor Carrier Safety Administration (FMCSA) released proposed changes to the federal Hours of Service (HOS) rules, which govern the amount of time truck drivers can spend on the road.
  • An overhaul of the Endangered Species Act includes new limits to where the government can block development by declaring land as “critical habitat.”

“These three developments highlight the administration’s continued focus on removing unnecessary regulatory burdens from the project delivery process,” said ARTBA Vice President of Regulatory & Legal Issues Nick Goldstein. “ARTBA will continue to work with federal agencies to keep advancing beneficial regulatory reforms.”

ARTBA also expects in the coming weeks to hear from the U.S. Department of Transportation about the potential repeal of a federal regulation that prohibits state and local governments from using patented or proprietary products on highway and bridge projects that receive federal funding unless those products qualify for limited exceptions. The rule was adopted in 1916 by the U.S. Department of Agriculture, which then managed the emerging federal-aid highway program.

To address the transportation problems on the local level, there will be higher taxes in some states: The fuel price news will be compounded in a handful of states where excise taxes where hiked just as folks were finalizing their July 4th travel plans.

Drivers in California, Connecticut, Illinois, Indiana, Maryland, Michigan, Montana, Nebraska, Ohio, Rhode Island, South Carolina, Tennessee, Vermont and along one major highway in Virginia will pay more for fuel, primarily gasoline, due to tax increases that took effect on July 1, 2019the start of their fiscal years.

Some were already in the works as phased-in incremental fuel tax hikes. Others are new, large bumps in the fuels’ prices. And a few apply to vehicles that run on diesel instead of gasoline. (Dontmesswithtaxes.com)

This fall could prove to be “legislatively interesting.” You will want to keep informed.

A Little Road Work

A Little Road Work

By Greg Sitek

Greg Sitek

What’s going to happen on September 30, 2020? The FAST Act — Fixing America’s Surface Transportation (FAST) Act — is scheduled to expire?

Will it?

If it does will it make a difference?

The American Road and Transportation Builders Association is working overtime to develop information and materials that can be used to guide the committees and congressional overseeing the reauthorization program and has taken a leadership role in informing the  industry and public as well.

Mark Holan, editorial director, ARTBA reports,ARTBA’s “Project 2019 Reauthorization Task Force,” comprised of 26 volunteer leaders from all eight-membership divisions, developed the industry’s legislative blueprint for the next highway and transit bill. The ARTBA Board unanimously approved the thoughtful and comprehensive policy report in May.

Visit ARTBA at artba.org to view a digital copy of the 32-page report, “The Road to the Next Federal Highway & Public Transit Investment Bill.”

Dean Franks, senior vice president, congressional relations, ARTBA says that ARTBA President and CEO Dave Bauer July 11 told members of the House Democratic Caucus to include a Highway Trust Fund revenue solution as part of any infrastructure legislation this year. Bauer reminded the members of Congress of the reliance states have on the federal transportation programs for highway construction spending.

The map above, created by ARTBA staff using Federal Highway Administration (FHWA) data, was distributed to the members. It shows states, on average, depend on the federal government for 51 percent of their highway construction programs.

The closed-door session featured other business and labor executives who also emphasized the need to address the long-term solvency of the trust fund. Members of Congress who spoke touched on the need to get a robust infrastructure package completed, as well as the various options for funding and financing transportation investments. Caucus Chairman Hakeem Jeffries (D-N.Y.) organized the meeting.

A comprehensive infrastructure bill in the House of Representatives has yet to materialize, though discussions between the White House and the Congress are reportedly ongoing. The Senate Environment & Public Works Committee is pushing ahead on the reauthorization of a surface transportation bill, with a mark-up of a bill scheduled for Aug. 1.

Again, ARTBA’s Dean Franks adds,The bipartisan leaders of the Senate Environment & Public Works (EPW) Committee traded priorities for an upcoming surface reauthorization bill during a July 10 hearing.  Chairman John Barrasso (R-Wyo.) was the first to reference those users of the system should be the ones to pay for the infrastructure investments and particularly mentioned the need for electric vehicle drivers to begin paying into the system. Ranking Democrat Tom Carper (D-Del.) said, “I have always believed that a long-term focus on national needs must include identifying new source of sustainable, user-fee base revenues to support investments in transportation.”

Barrasso also publicly announced for the first time that the legislation the committee is drafting would be a five-year bill. The two committee leaders said they want to pass a bipartisan bill out of committee before the Senate adjourns for the annual summer work period. An Aug. 1 target has been set for consideration in the committee.

This will be the first action on a surface transportation law since enactment of the FAST Act in December of 2015. That law, which expires in September 2020, required $70 billion in General Fund transfers and unrelated offsets to help pay for the bill.

The EPW committee has jurisdiction over the highway policy provisions of a surface transportation authorization process, while three other committees will need to weigh in on public transportation, trucking, rail and tax issues.

ARTBA will continue working with Barrasso, Carper and all committee members to get a bill with increased and growing investment levels approved out of committee as soon as possible.

In the “summer driving season” editorial by The Washington Post, it points out,‘States Are Doing It. So Why Hasn’t Congress Increased the Federal Gas Tax?’
On July 1, gas taxes went up in 13 states, not only blue ones such as California and Illinois, but also red ones such as Indiana, Nebraska, South Carolina and Tennessee.

Roads, the importance of roads and transportation goes back to The Appian Way or Via Appia Antica in Rome, one of the most famous ancient roads. It was built in 312 B.C. by Appius Claudius Caecus. … Roman roads and especially the Appian Way were extremely important to Rome. It allowed trade and access to the east, specifically Greece. The importance of roads hasn’t changed; it’s become paramount to our way of life.

Maintaining our transportation infrastructure isn’t an expense it’s an investment.

Tom Ewing’s Environmental Update

*  Now here’s something you don’t hear too much about anymore: Ozone, you know – O3, the weird molecule that includes 3 oxygen atoms and was the primary focus of air pollution policy for, oh, I don’t know, 45 years?  (Not to be confused with Ozone Park, in Queens, where “Ozone” was used in the neighborhood’s name to refer “to a park-like area with cool ocean breezes, an archaic definition” ((Ohhh…Ya think?)).  Ozone is the primary component in urban smog, summertime haze that plagued America’s urban areas for decades, and still does in LA and some other cities.  Ozone is a major regulatory focus for US and state EPAs.  The Ozone Transport Commission (OTC) and the MidAtlantic Northeast Visibility Union (MANE–VU) will hold their spring meeting on June 11, in Wilmington, DE.  The purpose of the OTC is to address ground-level ozone formation, transport, and control within the Ozone Transport Region, which includes Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, parts of Virginia and the District of Columbia.  Ozone policy is linked to every commercial and industrial activity in the modern world – from fuels to combustion to coatings to forest fires to transportation to manufacturing.  But still, not in the news too much anymore.
*  NOAA’s Advisory Committee on Commercial Remote Sensing (ACCRES) meets June 4 in Washington.  ACCRES was established in 2002, to advise the Secretary of Commerce “on matters relating to the U.S. commercial remote sensing space industry and on the National Oceanic and Atmospheric Administration’s activities to carry out the responsibilities of the Department of Commerce set forth in the National and Commercial Space Programs Act of 2010.”  The agenda includes a report on regulatory affairs and a Nanoracks overview.  Nanoracks, of course, is the deployment system for launching CubeSats, miniaturized satellites used for space research which can be launched really by anyone who has the money – and the smarts, of course!
*  National Marine Fisheries announced the availability of the “Deepwater Horizon Oil Spill Open Ocean Trustee Implementation Group Draft Restoration Plan 2 and Environmental Assessment: Fish, Sea Turtles, Marine Mammals, and Mesophotic and Deep Benthic Communities.”  The draft describes and proposes restoration project alternatives considered by the Open Ocean TIG (Trustee Implementation Group) to restore natural resources and ecological services injured or lost as a result of the Deepwater Horizon oil spill, which occurred, of course, 9 years ago on April 20, 2010, discharging millions of barrels of oil for a period of 87 days.  The Deepwater Trustees include nine state and federal agencies.  NMFS wants public comments on the plan; comments are due by July 1.
Tom Ewing

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