ECONOMIC UPDATE
2021 CONSTRUCTION ECONOMIC FORECAST
As Recession Threat Remains, ‘V’-Shaped Recovery Is at Risk of Becoming a ‘W’
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espite chronic difficulties sustained by contractors and others with securing human capital, in January 2020, the nation added 214,000 net new jobs. It followed that up with an even more blistering 251,000 jobs in February. For 113 consecutive months, the nation had added jobs—an unprecedented winning streak in the nation’s history. Unemployment, which peaked at nearly 10% during the most tumultuous phase of the Great Recession, had neatly drifted to a 50-year low of 3.5% as the pandemic loomed. Wage growth among workers was accelerating, helping to fuel retail sales, home purchases, construction and other aspects of economic life. Meanwhile, the lack of skilled craftspeople typically topped the list of contractor concerns. America was marching forward with an economy that appeared an indefatigable force. Such was 2020’s onset.
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Though unemployment dipped to multi-decade lows and wages ratcheted higher, overall inflation remained benign prior to the onset of the novel coronavirus pandemic. That helped to support lower interest rates, which in turn helped fuel a surge in building permits as the year began, drove financial markets to dizzying heights and created additional wealth for Americans to spend and invest. The United States had gone an entire decade without a recession and, if anything, the current decade appeared even more promising as the dislocations produced by the Great Recession receded ever further into the rearview mirror. With economic progress unchecked, the nation’s share of global output increased from 23% at the start of the decade of the twenty-teens to 25% by the decade’s final year.
ASSOCIATED BUILDERS AND CONTRACTORS OF MICHIGAN
