Economy
SMU Community Chat: Construction Outlook Looking Good
Written by Laura Miller
March 26, 2023
The outlook for the construction industry is relatively optimistic, despite the uncertain state of the overall economy, according to Ken Simonson, chief economist of the Associated General Contractors of America (AGC). Simonson, who chatted with SMU chief editor Michael Cowden on the March 22 SMU Community Chat, provided the most recent data covering many aspects of construction, as well as a medium- and a long-term outlook for the industry.
Medium term, Simonson believes the US will avoid a recession, despite the current high risk in the market. Any contagion from the banking industry will be unlikely to spill over into construction, but “I confess: I’m a serial optimist,” he noted on the chat.
Until interest rates and prices begin to flatten, spending on homebuilding is likely to fall for several months, he said. At risk from a slowdown and interest rates are the multifamily, warehouse, retail, office, and lodging sectors.
Although “money from the Infrastructure Investment and Jobs act hasn’t hit the street yet,” and will be slow to begin to flow, there will be a major boost to infrastructure, manufacturing, and power construction once they do, Simonson said.
The AGC’s long-run construction outlook includes challenges in finding workers, slower demand from slower population growth, and a permanent shift from retail to e-commerce/distribution structures. There will be more wind, solar, and battery storage and charging facilities built as well as related manufacturing and infrastructure.
The Arlington, Va.-based AGC is an association representing 27,000 firms active in the construction idustry, including general contractors, specialty-contracting firms, service providers, and suppliers.
Members can access the full replay of SMU’s latest conversation with the AGC’s chief economist, including a Q&A with those attending the chat via Zoom, on our website.
On SMU’s next Community Chat on Wednesday, April 5, Michael Cowden will discuss with CRU’s principal analyst Josh Spoores, among other things, CRU’s hot-rolled coil pricing forecast and the factors that go into making it, such as lead times, inventory, and current events. Click here to register.
By Laura Miller, laura@steelmarketupdate.com
Laura Miller
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