This is a post from Jim Haughey's blog that covers the US construction industry.

Jim Haughey is the Chief Economist for Reed Construction Data and has over thirty years experience as a business economist, including twenty years monitoring the construction market. He has a Ph.D. degree in economics from the University of Michigan and has previously taught at the University of Michigan, Ohio University, Michigan State University and the University of Massachusetts.

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Construction Industry Forecasts

Notes from Jim Haughey - Apr 21, 2011

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Big Texas budget cuts show strength of revolt against public spending
Jim Haughey, RCD Chief Economist

Texans do not think they are getting good value for their taxes, either in Washington or Austin and they blame a significant share of then recent rise in spending on services for illegal immigrants that Washington refuses to stop at the border. Texans want a smaller, less intrusive government with individuals more responsible for their own welfare. Also, nearly half of the proposed $23 Billion spending cuts are the result of 2005 cuts in business taxes that have been covered until now with budget surpluses, federal stimulus funds and drawing on the budget reserve. All three of these sources are no longer available.

The Tea Party demand for a smaller government and a reduction in public debts has become a major force in budget discussions at every level of government. Yes, spending cut proponents will have less clout when the economy has recovered more fully.  But they will have a major role in public budget discussions for many years, keeping a brake on appropriations for public construction.

The Texas legislature does not want to undo the business tax cuts because they believe that they are partly responsible for the booming Texas economy. Texas accounted for nearly 20% of the new jobs in the US over the last year and 16% of all US housing permits over the same period.

A year and half to two years ahead when state and local budgets have stabilized with no further need for painful emergency cuts and the federal debt is on a lower growth track, the political pressure for leaner government will still be restraining the usual late expansion period surge in public construction funding.  Federally subsidized energy and environmental projects are most at risk.


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Read Other Recent Jim Haughey Posts

08/15 - Contractor Survey: Work backlog rises in 2nd Q but may fall in the summer
08/09 - Modest construction recovery will be supported by two more years of cheap credit
07/29 - Sour economic growth report threatens construction recovery
07/27 - Worry about the deficit not the debt limit
07/27 - Worry about the deficit not the debt limit
07/27 - Worry about the deficit not the debt limit
07/19 - Housing starts rebound.6% in June after two weak months
07/18 - Congress prepares to postpone resolving the deficit crisis assuring an extended period of subpar eco
07/12 - House Transportation Committee proposes to keep federal highway funding at fuel tax receipt level
07/09 - Don’t count on debt limit deal to restart sustained high economic growth
07/08 - Contractors cut 9,000 jobs in June
07/05 - The cost and frustration of selling a home contributes to the delayed housing recovery
07/05 - May construction spending down 0.6%; recovery still on hold
07/01 - FAA stops works on federally funded runway and control tower projects
06/21 - It is not more jobs that will quicken the economic recovery
06/16 - Mays’ 3.5% gain in housing starts does not signal a housing recovery immediately ahead
06/15 - Cautious spending threatens to delay construction recovery
06/10 - Economic and construction recoveries will be subpar for at least another year
06/09 - NYC construction unions may agree to drop expensive work rules to spur more work
06/04 - Contractors add 2,000 jobs in May; overall job gain disappointingly low

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