Construction Forecasts

News & Analysis

The Impact of a Recession on Non-Residential Building Construction Spending

09/09/2011 by Bernard M. Markstein, RCD US Chief Economist

This section presents the impact of our alternative forecast of a recession on non-residential building construction spending. The recession forecast is not our view of what is most likely to happen but is of high enough probability (30%) to provide this alternative forecast. The table below shows the outlook based on our recession forecast with a comparison of the percentage changes to our baseline (main, most probable) forecast numbers. See The Impact of a Recession on the Construction Outlook for an overview of our recession forecast.

Non-residential building construction does relatively well in a recession scenario, with most categories growing more slowly, but not seeing a reversal. “For lease” private projects (lodging, office and commercial) do the best, with spending growing 4.4% in 2012 and 6.6% in 2013, compared to 7.2% and 9.0%, respectively, in the baseline forecast.

U.S. Nonresidential Construction
(billions of U.S. current dollars)

  Monthly Figures*
(latest actual values)
Annual Figures
  Actual Forecast
  May-11 Jun-11 Jul-11 2009 2010 2011 2012 2013
Lodging (% change is period vs 8.308 8.633 8.293 25.499 11.329 8.538 8.759 9.247
   same period, previous year) -26.5% -22.4% -24.6% -28.8% -55.6% -24.6% 2.6% 5.6%
Baseline Forecast YOY % Change           -26.8% 4.8% 9.8%
Office 34.451 34.961 34.578 51.908 37.573 34.757 37.426 40.638
-7.6% -5.8% -3.4% -24.3% -27.6% -7.5% 7.7% 8.6%
Baseline Forecast YOY % Change           -9.0% 10.7% 11.8%
Commercial (mainly retail) 43.604 44.065 45.030 54.069 40.522 42.498 43.411 45.663
7.8% 6.5% 15.4% -37.3% -25.1% 4.9% 2.1% 5.2%
Baseline Forecast YOY % Change           2.6% 4.9% 6.3%
Health Care 39.395 40.606 40.581 44.845 39.879 39.631 41.257 43.530
0.6% 4.1% 0.8% -4.4% -11.1% -0.6% 4.1% 5.5%
Baseline Forecast YOY % Change           -1.1% 5.2% 10.9%
Education 82.541 83.961 80.997 103.202 88.227 81.733 78.768 77.698
-5.9% -5.6% -11.0% -1.6% -14.5% -7.4% -3.6% -1.4%
Baseline Forecast YOY % Change           -8.2% -2.7% 7.0%
Religious 4.131 3.887 3.977 6.192 5.208 4.088 3.774 3.944
-24.8% -27.8% -21.7% -14.3% -15.9% -21.5% -7.7% 4.5%
Baseline Forecast YOY % Change           -22.3% -4.0% 7.3%
Public Safety 9.960 10.271 9.859 13.787 11.118 9.983 10.044 10.218
-14.0% -8.8% -8.0% 5.4% -19.4% -10.2% 0.6% 1.7%
Baseline Forecast YOY % Change           -14.8% 6.6% 12.4%
Amusement/Recreation 15.896 15.703 15.605 19.404 16.959 15.284 15.006 14.758
-4.2% -6.4% -10.1% -11.1% -12.6% -9.9% -1.8% -1.7%
Baseline Forecast YOY % Change           -12.4% 3.9% 7.1%
Manufacturing 33.907 37.259 34.951 56.836 38.106 33.596 34.081 35.912
-15.1% -4.9% -6.4% 6.8% -33.0% -11.8% 1.4% 5.4%
Baseline Forecast YOY % Change           -15.6% 4.9% 15.1%
Total 272.193 279.346 273.871 375.742 288.921 270.107 272.525 281.606
-6.0% -3.7% -5.0% -14.2% -23.1% -6.5% 0.9% 3.3%
Baseline Forecast YOY % Change           -8.3% 3.3% 9.5%

*Monthly figures are seasonally adjusted at annual rates (SAAR figures).
Actuals: U.S. Census Bureau (Department of Commerce) (put-in-place investment figures).
Forecasts and table: Reed Construction Data.


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