Charts for my presentation to the Mechanical Contractors Association of Metropolitan Washington on the outlook for the economy and construction

1. May 7, 2014
2016 Economic and
Construction Outlook
Presented by:
Bernard M. Markstein, Ph.D.
Markstein Advisors
Mechanical Contractors Association of Metropolitan Washington
Bethesda North Marriott
Bethesda, Maryland
May 2, 2016

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The U.S.
Economy

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 Economy growing, but should be better
 Employment growing, but should be faster
 Inflation remains moderate
 Federal Reserve raising interest rates: how high,
how fast?
 Strong dollar: pluses & minuses
 Energy (oil) prices
Overview of the Economy

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 Washington less of an obstacle, but how much real
cooperation are we seeing?
 China: slow(er) economic growth impact on world
economy
 Europe showing signs of improvement
Overview of the Economy

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Risks to the Economy
 Failure to pass needed legislation leads to reduced
federal government spending in the near term
 China
 EU – Brexit?
 Energy (oil) prices
 European government debt default (Greece)
 The euro (UK/Greece)
 Interest rates (the Fed)
 Russia?

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Construction
Overview

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0
200
400
600
800
1,000
1,200
1,400
1,600
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Residential Nonresidential Building Heavy Construction
$ Billions
History
Source: History – U.S. Census Bureau; Forecast – Markstein Advisors
Forecast
Forecast: The Rebound Continues
Construction Spending and its Components
Overview of Construction

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Residential
Construction

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0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Thousands of Units, SAAR
Nation’s long-run (trend)
need for the next decade
Low Estimate
(1.4 million starts per year)
Nation’s long-run (trend)
need for the next decade
High Estimate
(1.8 million starts per year)
1.13 M
Total Housing Starts
(3-Month Moving Average)
Source: U.S. Census Bureau
Shaded areas represent recession
Overview of Housing

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0
50
100
150
200
250
300
350
400
450
500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Thousands of Units, SAAR
Nation’s long-run (trend)
need for the next decade
Low Estimate
(250,000 starts per year)
Nation’s long-run (trend)
need for the next decade
High Estimate
(350,000 starts per year)
341k
Multifamily Housing Starts
(3-Month Moving Average)
Source: U.S. Census Bureau
Shaded areas represent recession
Overview of Housing

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0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Thousands of Units, SAAR
Nation’s long-run (trend)
need for the next decade
Low Estimate
(1.15 million starts per year)
Nation’s long-run (trend)
need for the next decade
High Estimate
(1.45 million starts per year)
792k
Single-Family Housing Starts
(3-Month Moving Average)
Source: U.S. Census Bureau
Shaded areas represent recession
Overview of Housing

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402
451
538
618 620
500
367
256 252 253
276
329
375
425
461
532
0
50
100
150
200
250
300
350
400
450
500
550
600
650
700
750
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
$ Billions
History Forecast
Source: History – U.S. Census Bureau; Forecast – Markstein Advisors
Residential Construction Spending

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0
50
100
150
200
250
300
350
400
450
Single-Family Multifamily Improvements
$ Billions
2006 to 2015 ’16 ’17
Residential Construction Spending
Source: History – U.S. Census Bureau; Forecast – Markstein Advisors

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Nonresidential
Building
Construction

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275 269
283
302
340
404
439
377
292 284
301 303
330
386
407
432
0
50
100
150
200
250
300
350
400
450
500
550
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
$ Billions
History Forecast
Source: History – U.S. Census Bureau; Forecast – Markstein Advisors
Nonresidential Construction Spending
Nonresidential Construction

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0
10
20
30
40
50
60
70
80
90
100
110
120
Hotel/Lodging Office Commercial
$ Billions
2006 to 2015 ’16 ’17
Nonresidential Construction Spending
Source: History – U.S. Census Bureau; Forecast – Markstein Advisors
Nonresidential Construction

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0
10
20
30
40
50
60
70
80
90
100
110
120
Manufacturing Healthcare Education
$ Billions
2006 to 2015 ’16 ’17
Nonresidential Construction Spending
Source: History – U.S. Census Bureau; Forecast – Markstein Advisors
Nonresidential Construction

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Heavy Engineering
Construction

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171 171 169
185
208
248
272 274
265
251
274 274
288 288
305
328
0
50
100
150
200
250
300
350
400
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
$ Billions
History Forecast
Source: History – U.S. Census Bureau; Forecast – Markstein Advisors
Heavy Engineering Construction Spending
Heavy Engineering Construction

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Contact Info and Links
Bernard M. Markstein
 Office: 301-588-5190
 bmarkstein@verizon.net
LinkedIn
 www.linkedin.com/in/markstein3
Twitter
 @BMarkstein