Anirban Basu's Articles

2018 Construction Economic Forecast: Confidence Is the Key

Last year, the U.S. economy only managed 1.5 percent growth. It then expanded just 1.2 percent during 2017’s initial quarter on an annualized basis, the latest in a string of weak first quarters. In other words, for more than a year, the U.S. economy has been consistently growing at less than 2 percent.

That changed, at least temporarily, during the second quarter of 2017. Based on revised estimates from the Bureau of Economic Analysis, the U.S. economy expanded 3 percent on an annualized basis from April through June. As has been the case for several years, much of the progress was driven by growth in consumer outlays. Government spending, by contrast, continues to contribute little, if anything, to the current pace of economic expansion. In fact, based on construction data, investment in a number of publicly financed infrastructure categories has been in decline, including spending on dams and levies, highways and streets, and water systems.  

Building the Contemporary Coliseum

When owners and operators of a professional franchise lobby a community for a new or updated stadium or arena, they frequently argue that construction and operation of the facility will boost the local economy. On the surface, that makes sense. Arenas and stadiums are expensive to construct and they have a propensity to attract large numbers of visitors with disposable income, including from other communities. That fuels spending, hotel stays, job creation and tax revenues.

Mid-year economic Forecast: Momentum Meets Intrigue

If economic performance reflected consumer and business ebullience, the United States would be in the midst of a historic boom. As an example, a recent Small Business Economic Trends survey from the National Federation of Independent Business (NFIB) indicates that business confidence is at the 97th percentile, meaning business confidence is only this high 3 percent of the time. According to NFIB, “small business owners remain optimistic about the future of the economy and the direction of consumer confidence. We are encouraged by signs that optimism is translated into economic activity, such as capital investment and job creation.”

How Millennials Have Shaped the Construction Industry—for Better and for Worse

Last year marked a milestone for the country’s youngest generation of workers, commonly known as millennials: They overtook baby boomers as the largest workforce segment in America. Employers should be ecstatic that elevated rates of retirement are positioned to be offset by an influx of younger, energetic, tech-savvy workers ready to stimulate productivity. 

Optimism Rises for Near-Term Infrastructure Spending

Stepping away from campaign promises and political conjecture, 2017 should be a decent year for the transportation
construction market, with the best years for spending growth still ahead. 

2017 Construction Outlook

For now, it’s tempting to maintain a somewhat pessimistic outlook. A combination of debt accumulation and low interest rates appears to have taken asset prices above levels supported by economic fundamentals. This renders the macro-economy and that of the nation’s nonresidential construction sector somewhat vulnerable to asset price adjustments.  

The Need Is Obvious; The Political Will Is Not

P3s are the only conceivable financial solution to America’s infrastructure deficits.  

Spending Stabilizes at Elevated Level; Supply Constraints Become More Apparent

While nonresidential construction spending growth struggles to maintain momentum, the balance of 2016 should prove a rewarding period for many construction companies. America’s consumer-led economic recovery remains in place, and construction backlog remains at elevated levels. 

Safety: A Near-Perfect Alignment Between Doing the Right Thing and Enhancing Profitability

Firms with better safety records are less exposed to lawsuits and claims for workers’ compensation. Trained workers are more likely to stay on the job. Better safety means fewer expenses to repair damaged equipment and reputation. And, safe companies eliminate the costs of investigation, potential workplace interruptions and impacts on morale.  

The Millennials Are Here, and More Are Coming

Technology that renders the worker more productive may allow for increased flex time, engender more interest in the work and support higher retention. That technology also may produce greater precision, fewer delays and bolster recruitment of highly capable young workers who seek to be in an ultra-modern environment. But this technology also may prove expensive, which means that well-capitalized construction firms have the advantage over time. 

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