http://www.reedconstructiondata.com/jim-haughey/ Reed Construction Data Chief Economist Jim Haughey discusses how current developments in the US economic environment will bring opportunities and challenges for designers, contractors, and materials and services providers. en rcdwebmaster@reedconstructiondata.com Copyright 2009 2009-11-06T16:00:00-05:00 http://www.reedconstructiondata.com/jim-haughey/post/contractors-cut-62000-more-jobs-in-october-mostly-for-nonresidential-buildi/?nid=4268 http://www.reedconstructiondata.com/jim-haughey/post/contractors-cut-62000-more-jobs-in-october-mostly-for-nonresidential-buildi/#When:16:00:00Z Construction employment continues to drop rapidly at a pace little changed from previous months. 30,000 of the October layoffs were made by nonresidential subcontractors which is consistent with the current rapid decline in this sector. However, nonresidential general contractors only cut 3,000 jobs. This disparity suggests that business expense cut mandates are deeply trimming maintenance, repair and small remodeling projects done directly withy subcontractors. A similar cutback in small residential projects occurred earlier in the recession. Market Insights 2009-11-06T16:00:00-05:00 http://www.reedconstructiondata.com/jim-haughey/post/federal-highway-funding-still-temporary/?nid=4268 http://www.reedconstructiondata.com/jim-haughey/post/federal-highway-funding-still-temporary/#When:18:30:00Z Federal highway funding has been extended for a second seven week period to December 18, 2009. The extension is nominally at the 2009 FY level but works out to permit states to obligate about $1 Billion per month less than in the last fiscal year. This is not yet an immediate problem for spending at highway job sites but does shrink the pipeline for 2010-11 work. The highly likely failure to enact a permanent funding solution by December 18th would begin to restrain highway construction spending very early in 2010. Market Insights, Commercial Building & Heavy Engineering, Economy & Finance 2009-11-03T18:30:00-05:00 http://www.reedconstructiondata.com/jim-haughey/post/housing-gets-another-boost-from-washington/?nid=4268 http://www.reedconstructiondata.com/jim-haughey/post/housing-gets-another-boost-from-washington/#When:12:00:01Z Congress appears set to extent the $8,000 first time home buyer tax credit for six months. The Senate version would also include a $6,500 credit for people who had have owned their current home for at least five years. And the income limits would be raised to $125,000 for single people and to $225,000 for joint tax returns. The boost to housing will begin in November after small setbacks in the housing recovery in September and probably again in October. The peak impact will likely be early in the winter when home construction is at its seasonal low point. Market Insights 2009-11-02T12:00:01-05:00 http://www.reedconstructiondata.com/jim-haughey/post/initial-jump-in-gdp-growth-will-ebb/?nid=4268 http://www.reedconstructiondata.com/jim-haughey/post/initial-jump-in-gdp-growth-will-ebb/#When:11:17:00Z The 3.5% 3rd quarter jump in GDP is the start of another extended period of economic growth which will quickly end the four year decline in construction spending. Unlike previous turns from recession to recovery, this initial burst of growth will ebb quickly with the pace of growth not returning to a sustained 3% level for several years. The summer surge in growth was mostly the result of federal pump priming which had its peak impact in the 3rd quarter. 62% of last quarters’ growth was in the auto, new home and federal government sectors. Autos and housing will not contribute to growth in the current quarter because the temporary buying subsidies have expired. Market Insights 2009-10-30T11:17:00-05:00 http://www.reedconstructiondata.com/jim-haughey/post/two-cities-illustrate-divergence-in-regional-economic-growth/?nid=4268 http://www.reedconstructiondata.com/jim-haughey/post/two-cities-illustrate-divergence-in-regional-economic-growth/#When:12:40:00Z Las Vegas, Nevada and Bismarck, North Dakota are now at opposite ends of the metro economic performance scale as the economy turns from deep recession to recovery. Las Vegas may be the most recession ravaged city in the country while Bismarck is one of the few cities that survived the recession with almost no damage. A few years ago Las Vegas was booming and Bismarck’s economy was struggling to stay near average growth. How one city collapsed and another one prospered in difficult times is useful lesson in anticipating how your geographic market will fare, relative to the whole country, over the course of an economic cycle. The differences in economic growth between metro areas over a business cycle are far larger than the differences in national economic growth at different points in time during a business cycle. National economic trends impact every metro area but local economic trends can often overwhelm national trends. Market Insights 2009-10-29T12:40:00-05:00 http://www.reedconstructiondata.com/jim-haughey/post/no-credit-shortage-now-but-it-is-coming/?nid=4268 http://www.reedconstructiondata.com/jim-haughey/post/no-credit-shortage-now-but-it-is-coming/#When:09:27:00Z The current misunderstanding of the credit situation and how it will evolve through 2010 pose a high risk that Washington will focus on the whining and not the real problem and that business managers will be unprepared for the credit situation a year ahead. Over the course of about two years from summer 2008 to late 2010 the credit markets are in four distinctly different situations. Each of these needs a very different policy response in Washington and a very different operating strategy by business managers. Market Insights 2009-10-29T09:27:00-05:00 http://www.reedconstructiondata.com/jim-haughey/post/how-to-boost-consumer-confidence/?nid=4268 http://www.reedconstructiondata.com/jim-haughey/post/how-to-boost-consumer-confidence/#When:23:09:00Z The October drop in Consumer Confidence to 47.7 from 53.4 in September reported by the Conference Board is a setback for the economic and construction outlook. The small decline in September could be dismissed as random. But the latest decline signals enough more reluctance to spend that all marketers should be concerned. Confidence is an attitude which can change quickly with new information before there is any impact on checking accounts so the setback still may be temporary. If not, the confidence setback is likely due to the peaking or expiration of many federal programs to stimulate the economy. The consequence will be a long and sluggish economic recovery. Market Insights 2009-10-28T23:09:00-05:00 http://www.reedconstructiondata.com/jim-haughey/post/recent-jump-in-energy-prices-will-not-be-sustained/?nid=4268 http://www.reedconstructiondata.com/jim-haughey/post/recent-jump-in-energy-prices-will-not-be-sustained/#When:14:56:00Z Energy prices have recently risen above expected trend levels but do not appear to pose a significant threat to the pace of economic growth in the year ahead. Spot crude oil prices are near $80, about $10 higher than the expected trend through the winter. Spot natural gas prices have soared over $5 (per thousand BTU’s) which is also well above the expected winter price average. But energy inventories remain unusually high as does the production reserve. Market Insights 2009-10-26T14:56:00-05:00 http://www.reedconstructiondata.com/jim-haughey/post/tax-credit-spurs-jump-in-existing-home-sales/?nid=4268 http://www.reedconstructiondata.com/jim-haughey/post/tax-credit-spurs-jump-in-existing-home-sales/#When:16:46:00Z September existing home sales jumped 9.4% to an annualized pace of 5.57 million, the highest total in two years. Credit the $8,000 first time buyer tax credit for most of this gain although an improving economic environment for home buying also contributed. The rush to beat the end of November expiration of the tax credit should keep October and November sales at about the same level Then sales will dip when the credit expires. There will be a small dip even if Congress extends the credit. Market Insights, Economy & Finance, Housing 2009-10-23T16:46:00-05:00 http://www.reedconstructiondata.com/jim-haughey/post/housing-stall-continues/?nid=4268 http://www.reedconstructiondata.com/jim-haughey/post/housing-stall-continues/#When:14:07:00Z At 590,000 September housing starts remained at the June-August level. At 573,000 September housing permits remained at the June-August level. This stall in the housing recovery was expected. The initial recovery surge was jump started by federal pump priming in the housing and consumer markets. Without additional federal housing or consumer subsidies, the subsidies can not push housing starts higher. And housing permits and starts will slip lower when the subsidies expire later this year unless there are fundamental improvements in economic conditions. Reed Construction Data still expects enough improvement in income and confidence later to year to offset expiring subsidies and to resume the housing recovery. Market Insights 2009-10-20T14:07:00-05:00