Will 2018 Meet Expectations?
By Greg Sitek
The future of the U.S. is shrouded in confusion, hostility, distrust, threats, uncertainty, criticism, discord, disasters, failing infrastructure, and an almost endless list of problems. But even so, we are experiencing a growing economy high employment rates, low inflation rates, strong housing market and an equally long list of positive things.
The U.S. ended 2017 with having a string of hurricanes – Harvey, Irma, Jose, and Maria – that caused around $200 Billion dollars in damages only to be followed by a season of fires that destroyed thousands of homes, building, thousands of acres of forests and intensified the stress on an exhausted infrastructure.
Thanks to the thousands of people who have and continue to pitch in with physical help, equipment, materials and supplies hurricane recovery and rebuilding is underway but will take years to accomplish. Groups like Team Rubicon and other veteran organizations along with donations of money and equipment by manufacturers, trade association, dealers, individuals and so many others have made it possible to push ahead with what is an overwhelming task. Healing is always a slow process.
In addition to the tests thrown at us by Mother Nature, we have had a cascade of political and social speed bumps adding hazards as we travel our road into the future slowing the forward momentum and intensifying the risk.
We know what 2017 was like. What can we expect for 2018 and beyond?
Economic forecasting is always tricky and unlike weather forecasting more critically important, especially for the forecaster. We’ve all heard the comment, “Being a weather forecaster is the only job where you can be wrong most of the time and not get fired.” This doesn’t apply to the economists who look at the conditions that are, that were and that will be.
Predictions for 2018 tend to be positive with most economists confident that we will sustain continued and improved national economic growth. I haven’t heard any of them forecasting a recession in the immediate future – the next six months and beyond.
We have included construction industry forecast from leading resources: Wells Fargo Economics Group, American Road & Transportation Builders Association (ARTBA) and Associated Builders & Contractors (ABC). There are many others who do an excellent job of industry forecasting.
On that I wish we could have included but didn’t have room is:
Dodge Data & Analytics (https://www.construction.com/) recently released its 2018 Dodge Construction Outlook, a mainstay in construction industry forecasting and business planning. The report predicts that total U.S. construction starts for 2018 will climb 3% to $765 billion.
“The U.S. construction industry has moved into a mature stage of expansion,” stated Robert Murray, chief economist for Dodge Data & Analytics. “After rising 11% to 13% per year from 2012 through 2015, total construction starts advanced a more subdued 5% in 2016. An important question entering 2017 was whether the construction industry had the potential for further expansion. Several project types, including multifamily housing and hotels, have pulled back from their 2016 levels, but the current year has seen continued growth by single-family housing, office buildings, and warehouses. In addition, the institutional segment of the nonresidential building has been quite strong, led especially by transportation terminal projects in combination with gains for schools and healthcare facilities. As for public works, the specifics of a $1 trillion infrastructure program by the Trump Administration have yet to materialize, so activity continues to hover around basically the plateau for construction starts reached a couple of years ago. Total construction starts in 2017 are estimated to climb 4% to $746 billion.”
“For 2018, there are several positive factors which suggest that the construction expansion has further room to proceed,” Murray continued. “The U.S. economy next year is anticipated to see moderate job growth. Long-term interest rates may see some upward movement but not substantially. While market fundamentals for commercial real estate won’t be quite as strong as this year, funding support for construction will continue to come from state and local bond measures. Two areas of uncertainty related to whether tax reform and a federal infrastructure program get passed, with their potential to lift investment. Overall, the year 2018 is likely to show some construction project types register gains while other project types settle back, with the end result being a 3% increase for total construction starts. By major sector, gains are predicted for residential building, up 4%; and nonresidential building, up 2%; while nonbuilding construction stabilizes after two years of decline.”
Association of Equipment Manufacturers (AEM) has posted a radio link on its CONEXPO-CON/AGG New update. To hear it you can do so at: