MCC Construction Zone The Construction Outlook Rich Higgins, CPA
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o many economists are weighing in with their predictions for the construction industry, and rightfully so. What happens in the construction industry is often the prelude to what will happen to the rest of the economy. According to Oxford Economics, a leader in global forecasting and quantitative analysis, the construction market will rise by 3.5% by the end of 2023.
Oxford Economics’ baseline forecast calls for 7.3% Gross Domestic Product (GDP) growth in 2022. Its forecasts are based on Biden’s infrastructure plan becoming law. According to the updated White House Fact Sheet on the American Jobs Plan (AJP), $2 trillion is earmarked to be spent on America’s infrastructure over the next decade. Even so, a lot of things could happen. AJP might not become law in its current form. If vaccines have limited effectiveness against COVID variants, Oxford Economics projects that growth maybe just under 3%. If inflation persists, growth might be just under 6%. But if everything goes right and the “consumer boom” ensues, growth could jump to nearly 10%. Economists at Morgan Stanley say that the second-half growth slowdown will occur in the third quarter. Gross domestic product growth in the July-September period is projected to be 2.9%, down sharply from the previous figure of 6.5%. Even so, Morgan Stanley maintains its fourth quarter growth projection of 6.7%.
The bottom line is that we are in a very fluid situation. We must look at many other scenarios based on current fact and future possibilities before deciding on the direction to take. What happens in one period may be very different from what will happen in the next. It is therefore important to keep up with the economic data from numerous trusted sources. 3 | Page
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