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 - Jun 16, 2011

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Mays’ 3.5% gain in housing starts does not signal a housing recovery immediately ahead
Jim Haughey, RCD Chief Economist

The slowdown in GDP growth from 3% + to at most 2% in the first half of 2011 was set off by higher energy prices, the Japanese parts shortage and the high probability of a Greek bond default. Auto, consumer durables and manufacturing took direct hits but the rest of the economy is getting a negative spillover impact which did not fully reach the housing market in May. The NAHB builders’ confidence index dropped sharply in June to near the recession low level so no significant pickup in housing starts is likely in June and possible July.

Housing starts remain constrained by the lingering bad debts from the 2008 credit crisis. But that constraint is not now binding.  There is now enough credit and enough credit worthy borrowers at current credit approval standards and loan terms to support housing starts well above 650,000 – perhaps as high as 1.0 million. Beyond that level the credit constraint would be binding. But until that level of starts is reached, the effective constraint on housing starts is the combination of very low consumer confidence, depressed real incomes and still falling home prices.

 


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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
06/15 - 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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