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 - Jul 12, 2011

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House Transportation Committee proposes to keep federal highway funding at fuel tax receipt level
Jim Haughey, RCD Chief Economist

The Senate plan is a two year $109 Billion program which is approximately the equivalent of a $350 billion six year program. President Obama’s budget request was for a six year $556 billion program. The Obama plan is out of touch with current financial realities and will not be part of the compromise negotiations.

Reed Construction Data expects highway construction spending to drop 5-6% in 2011 which is about back to the 2007 level. 2012 spending is forecast to expand 8-9%. The 2011 dip reflects the ebbing of highway stimulus funds and the weakening of state and local government finances. The 2012 rebound will be the result of a modest improvement in state and municipal finances, more use of private funding and changes in the federal highway program that close many of drain holes that siphoned federal highway funds off for other uses.

If the House and Senate split their funding difference, the result will again be a $285 Billion six year plan. We expect the compromise to include many of the reform elements in the Senate and especially the House proposals. So the new $285 Billion plan will build more roads, bridges, drainage and crash barriers. The new plan will have no earmarks, eliminates more than 70 special programs such as promoting bike paths, streamlines approval and review processes and makes the use of private funds easier. The earmarks were generally for roads that would not otherwise have been built or repaired. The special programs were generally added at the request of individual members of Congress for non paving or bridge work or public works projects that are typically financed in municipal budgets.

If this forecast is accurate, 2012 highway spending will be 5% higher than 2009 spending which is too little to cover higher labor and materials costs over three years. The inflation adjusted level of highway spending will have been stalled for five years from 2008 to 2012.



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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
07/09 - 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
05/25 - No consensus for 2nd quarter GDP growth

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