I’m not a huge Disney fan…honestly…I’m not. But these lines stick out to me from the Frozen song I used as a title for this piece:
There’ll be actual real live people
It’ll be totally strange
But wow, am I so ready for this change!
Our latest national and regional forecast was released to customers at the end of April. On the surface, our forecast for total construction starts is little changed relative to the version released in early February. However, the underlying fundamentals – and future assumptions – have trended positive. Very positive.
First, the $1.9 trillion American Rescue Plan was signed into law in March and when combined with a steady rise in the number of vaccinated Americans is releasing a near tsunami of economic growth that will extend into mid-2022. While the economy will be back to pre-pandemic levels by the summer, construction has a way to go. Demand for nonresidential buildings remains weak, and rapidly rising material costs are a significant downside risk that will restrain activity through the end of the year. Single family construction remains a standout but will struggle as lumber prices and rising home prices reduce affordability.
By the end of the year, we anticipate seeing another major fiscal package becoming law – $850 billion devoted to core infrastructure spending. I would encourage you to watch a replay of our April 27th webinar where I outlined our infrastructure assumptions and their impact on the forecast. Suffice to say though, regardless of which plan ultimately wins out, our baseline assumption for infrastructure construction has been significantly upgraded relative to our previous forecast.
The U.S. has suffered intensely over the past year — both economically and socially. While there remains a long road back to life the way it was before COVID-19, for the first time in what feel’s like forever we’re able to say with a high degree of certainty that the outlook for both the economy and the construction sector looks bright.
Which brings us back to the beginning. The title of this piece I think really encapsulates how we should be thinking about this next phase. Economic downturns, and recoveries, are a chance to refresh how we think about growth and opportunities. It’s a chance to give our business plans a complete refresh – to engage creativity and new thinking in order to capture the next wave of growth. It should only be Onward and Upward from here.