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 - May 25, 2011

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No consensus for 2nd quarter GDP growth
Jim Haughey, RCD Chief Economist

The Reed construction spending outlook is based on GDP growth of 2.4% this quarter, 2.5% for 2011 and 3.1% for 2012. This is below the average of all forecasts for the current quarter but near the average for 2011 and 2012. Compared to the more pessimistic GDP forecasts, the Reed economic and construction outlook expects a quicker and stronger recovery in nonresidential building construction and less falloff in heavy construction. Compared to the more optimistic GDP forecasts, the Reed economic and construction outlook expects a later and slower residential construction recovery.

Reed assesses the recent negative shocks to the economy as more serious than most economic forecasts do. These shocks include the impact on manufacturing from the loss of Japanese components, high energy and other commodity prices, continued slashing of public budgets at all levels, tornados, and the rising probability that the Euro bank bailout of Greece and Portugal was not large enough and will need more funds from a reluctant Germany, France and the UK. All of these shocks are hitting at once and will depress US economic growth at midyear and linger long enough to prevent an offsetting rebound later in the year.

The various GDP forecasts make different assumptions about the restraint on the housing recovery still in place after the 2008 financial crisis. Reed believes that the lockout of tens of millions of households from the mortgage market will be more damaging and persistent than many other forecasts assume.  Also, we have discounted the housing starts forecast to account for the high probability that various recent legislative initiatives and lawsuits will extract billions of dollars in fines from the mortgage market and impose more cost and delay in originating mortgages and processing defaults.

 


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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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