Everyone is talking about the fiscal cliff and what will happen if the economy tumbles off the cliff. A review of AIA publications, AGC articles, and industry blogs, reveals that the outlook for the construction industry is not good if we do fall off the fiscal cliff.

A recent study by the AIA analyzed the impact of going over the fiscal cliff. The study reviewed figures from the Office of Management and Budget (OMB) that revealed governmental spending on federal construction projects would decrease approximately 9%. This reduction would be more than $2 billion from the $25.2 billion spent in 2012.

Following this study, AIA President Jeffery Potter wrote the President and Congress expressing concern that the failure to act could bring any signs of economic improvement to a complete stop. He also pointed out that the harsh budget reductions caused by going over the fiscal cliff will cost taxpayers more in the long run as repairs, maintenance and retrofits are put off and the price tag for these necessary repairs will rise.

Associated General Contractors has also weighed in on the fiscal cliff. In an article earlier this month, AGC’s chief economist commented that if the nation can get past this crisis, there could be an upswing in construction hiring in 2013. He did note that Nebraska was near the top of the list for adding construction jobs in the last year, 3000 jobs.  But, just the threat of the fiscal cliff was impacting construction throughout the country as many firms have delayed hiring or reduced staff because of the threat of federal spending cuts.

There is no question that going over the fiscal cliff would have devastating ramifications in the construction industry. If we do go over the cliff, contractors will again be trying to expand their project portfolio to offset the reduction in governmental projects.