Since we avoided the fiscal cliff, for now, are we in for a big year in 2013? Or, will we have another year like 2012? Associated Builders and Contractors’ chief economist Anirban Basu provided his insight in the latest edition of ABC’s Construction Executive. Not surprisingly, the outlook is not rosy.
First, a recap of 2012. This past year we saw slight growth, probably in the 2% range. This was better than some countries’ economies, but certainly less than China or India. And, we experienced some of the same problems from 2011, such as high gasoline prices, rising food costs and tensions in the Middle East, all of which detrimentally effected growth.
Looking ahead to 2013, Dr. Basu predicts that the economy will continue its slow recovery, with nonresidential construction spending expanding 5.2%. He expects much of this growth to come from privately financed projects. Publicly funded projects will likely be flat or somewhat worse. He also expects total commercial construction to expand roughly 10%, with an emphasis on power, lodging, health care and manufacturing. But, even this nominal growth may be inhibited by volatile materials prices, which are expected to rise 2% this year.
Interestingly, Dr. Basu noted that the construction industry is most lacking confidence. The fear of another recession has suppressed construction starts in both the private and governmental sectors.
All in all, 2013 is looking like a repeat of 2012. But, if Congress does not resolve the fiscal cliff issues by March, 2013 could get ugly in a hurry.