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SEPTEMBER 9–11 • BELLAGIO • LAS VEGAS, NV
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SEPTEMBER 9–11 • BELLAGIO • LAS VEGAS, NV
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
Annual Economic Outlook &
State of the Industry Report
Outlook for the Economy and
Nonresidential Construction
Bernard Markstein
U.S. Chief Economist
Reed Construction Data
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
The U.S. Economy
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
Economy has been growing at a barely acceptable rate
Employment growing, but should be faster
Unemployment rate down, but not always for the right reasons
Inflation moderate
SF housing recovering, but from a very low level
MF largely recovered, but still room for improvement
Lending standards, although improving, remain relatively tight
Interest rates up and headed higher (eventually)
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
Risks to the Economy
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
Funding federal operations – can Congress accomplish
any of its basic functions?
The federal debt ceiling – another chance for
congressional dysfunction
Fed tightening/higher interest rates
Europe
European government debt default
The euro
Energy (oil) prices
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
Construction turned around in 2012,
but has struggled this year
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
02 03 04 05 06 07 08 09 10 11 12 13 14
Residential Nonresidential Building Heavy Construction
$ Billions
History Forecast
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
Construction Spending and its Components
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
Residential construction is recovering, but from a low level
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Thousands of Units, SAAR
Nation’s long-run (trend) need for
the next decade
High Estimate
(1.45 million starts per year)
Nation’s long-run (trend) need for
the next decade
Low Estimate
(1.15 million starts per year)
Single-Family Housing Starts
Source: U.S. Census Bureau
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
Source: U.S. Census Bureau
0
50
100
150
200
250
300
350
400
450
500
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Thousands of Units, SAAR
Nation’s long-run (trend) need for
the next decade
High Estimate
(350,000 starts per year)
Nation’s long-run (trend) need
for the next decade
Low Estimate
(250,000 starts per year)
Multifamily Housing Starts
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
Source: U.S. Census Bureau
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13
Thousands of Units, SAAR
Nation’s long-run (trend) need
for the next decade
High Estimate
(350,000 starts per year)
Nation’s long-run (trend) need
for the next decade
Low Estimate
(250,000 starts per year)
Multifamily Housing Starts
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
0
100
200
300
400
500
600
700
800
02 03 04 05 06 07 08 09 10 11 12 13 14
Improvements Single-family Multifamily
$ Billions
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
Residential Spending Components
History Forecast
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
Nonresidential building construction has struggled this year, but is expected to
perform better in coming months and in 2014
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
0
10
20
30
40
50
60
70
80
90
100
Hotel/Lodging Office Commerical
2002 2003 2004 2005 2006
2007 2008 2009 2010 2011
2012 2013 2014
$ Billions
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
Nonresidential Construction Spending
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
Nonresidential Construction Spending
0
10
20
30
40
50
60
70
80
90
100
110
Religious Healthcare Education
2002 2003 2004 2005 2006
2007 2008 2009 2010 2011
2012 2013 2014
$ Billions
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
Nonresidential Construction Spending
0
10
20
30
40
50
60
70
Public safety Amusement and recreation Manufacturing
2002 2003 2004 2005 2006
2007 2008 2009 2010 2011
2012 2013 2014
$ Billions
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
Heavy engineering (non-building)
construction held up best over the last few years
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
Heavy Engineering Construction Spending
0
10
20
30
40
50
60
70
80
90
100
110
120
130
Transportation Communication Power
2002 2003 2004 2005 2006
2007 2008 2009 2010 2011
2012 2013 2014
$ Billions
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
Heavy Engineering Construction Spending
0
10
20
30
40
50
60
70
80
90
100
110
Highway Water and Sewer Conservation
2002 2003 2004 2005 2006
2007 2008 2009 2010 2011
2012 2013 2014
$ Billions
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
A look at regional economic
performance
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
Source: Philadelphia Federal Reserve Bank
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
Source: Philadelphia Federal Reserve Bank
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
Twitter twitter.com/Bmarkstein
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LinkedIn www.linkedin.com/company/reed-construction-data
web www.reedconstructiondata.com
Connect with Reed Construction Data
SEPTEMBER 9–11, 2013 • BELLAGIO • LAS VEGAS, NV
ANNUAL ECONOMIC OUTLOOK & STATE
OF THE INDUSTRY REPORT
Contact Information and Links
Bernard M. Markstein
Office: 301-588-5190
Mobile: 404-952-3381 [email protected]
U.S. Forecast and Commentary: http://www.reedconstructiondata.com/market-
intelligence/articles/
Blog:
http://www.reedconstructiondata.com/market-intelligence/bernie-
markstein/
