On March 27, Construction Executive presented its "2024 Q1 Economic Update and Forecast," hosted by ABC Chief Economist Anirban Basu. If you've attended previous versions of this webinar, you're familiar with Basu’s pragmatic approach to the economics of the construction industry and his penchant for predicting recession. But this quarter, he opted for an almost-optimistic approach and hinted at walking back his thoughts on recession.

Read the most quotable moments, new poll results and top takeaways from the presentation below.

POLL RESULTS: Q1 2024 vs. Q4 2023

Poll 1: Which of these is the leading challenge for your company today?

Supply chain and/or materials issues

Skills/worker shortage

Insufficient demand for construction services

Availability of financing for projects/project work

None of the above

December 2023

10%

57%

11%

19%

3%

March 2024

7%

60%

11%

17%

6%

The change between quarters among all categories was within 3 percentage points. Considering this, Basu said, “None of this suggests there are any recessionary conditions for the industry anytime soon.”

Poll 2: Over the last three months, how has your company’s backlog fared?

Risen considerably

Risen slightly

Remained the same

Declined slightly

Declined considerably

December 2023

12%

24%

25%

28%

12%

March 2024

13%

27%

27%

23%

10%

The change between quarters among all categories indicates a slight improvement in company backlog overall. Percentage points rose for areas of incline and decreased for areas of decline.

Basu noted a similar improvement in the greater economy as well: “On average, things have gotten better than they were last year, the stock market is booming, confidence is up amongst construction service purchasers.”

Poll 3: Where do you expect your company’s profit margins to be a year from now?

Substantially higher

Slightly higher

The Same

Slightly lower

Substantially lower

December 2023

1%

32%

28%

32%

7%

March 2024

8%

33%

38%

17%

4%

The change between quarters among all categories shows that people who think their profit margins will become substantially higher jumped from 1% to 8%. Percentage points rose for areas of incline and decreased for areas of decline.

Basu did sound a cautionary note, saying, “Certain sector outlooks are not as good as the overall outlook, though,” while also noting that manufacturing is booming even as office vacancies are still at a remarkable level.

POSITIVE OUTLOOK

“The good can take many forms, it has many incarnations, but in terms of economics, it takes the form of an economy that has vastly outperformed expectations. The economy in 2023 vastly outperformed mine. I will admit I was too pessimistic last year.”

“Instead of entering recession, the economy did well. The indication of that is growth in our nation’s output…with a blockbuster third quarter at 4.9% GDP growth, a record Black Friday, record Cyber Monday, record numbers traveling through TSA checkpoints. The U.S. consumer is spending.”

“Not only is she a music phenomenon, Taylor Swift is an economic phenomenon.”

“Many people in America are living paycheck to paycheck, but there are a lot of paychecks in America…. When you enter the month with a multitude of job openings, over the course of time you will continue to add jobs to the employment record.”

BUT NOT 100% POSITIVE

“Is this current economic cycle sustainable? At the heart of that question is the American consumer, who continues to spend, which is a draw from pandemic-related excess savings, stimulus payments, remote work, wage increases and an inability to spend on [travel], retail and consumer goods…. Almost all of that savings has been spent, which has fueled sales and job growth, but it can’t persist.”

“Maybe there won’t be a recession, but there will definitely be some economic slowing going forth.”

"Consumers are under pressure from high interest, resulting in too much spending, credit-card defaults and more. Now imagine the labor market starts to falter. we might start to see an upward trend in layoffs and unemployment."

“Supply chains have improved. They are far more dependable than they were in late 2021. As supply chains improve, you get more transactional volume, as we saw with the new and used car markets. But regarding homes, we don’t have any sellers of existing homes; they are sitting on their low rates. Single-family building permits are gaining momentum because single-family builders spy an opportunity for unmet demand, but multifamily is falling in comparison, perhaps due to a tough time with project financing as illustrated in the poll. That is my thesis.”

RECESSION NO MORE?

“Total nonresidential construction spending is up since February 2020, by 34.8%, a function of the fact the U.S. economy is changing, the supply chain is coming back home and manufacturing is booming”

“The ABC Confidence Index is not indicative of recession. It is optimistic, and people think they can push their profit margins even higher.”

“The Leading Economic Index is showing things will get worse for the economy, but that will most likely show up with the consumer. For there to be a recession, you need to see a meaningful correction in the stock market, which we haven’t seen; it is up.”

“I’m about to drop my recession forecast, but I’ll stick with it for now, I might be right, but I might be wrong.”

The full recording is available here.