We are 7 years into the U.S. economic recovery—how long can it last? That was the basis of economist Anirban Basu’s energetic and entertaining talk last week at ASCC’s Concrete Executive Leadership Forum (CELF). What can we expect in construction?
Over the past year, the construction industry has added 217,000 jobs to the payroll, leaving unemployment among construction workers at 4.6%. But that may actually represent full employment since those still without jobs may be in one of the few states with slow construction or that 4.6% may represent people who say they are construction workers but have few real marketable skills.
He cautioned us to take economic predictions with a grain of salt since “they assume rational behavior,” and so much of what’s going on is not rational. Why would countries, like Russia and Iran, continue to produce oil when “the world is awash in oil?” Why would interest rates continue to be so low, even negative in Japan?
One thing Basu thinks is keeping the U.S. construction economy going right now is foreign investment in U.S. construction which can result in imbalances of too much hotel or office or multifamily space. Why are they investing so much here? Where else can they invest their money and expect any sort of reasonable return?
The bottom line: “We are in the seventh inning of the commercial building cycle,” he said, with a downturn in the overall economy probably coming in 2017 or 2018 and construction turning negative about a year later.