AGC Financial Issues Forum
June 19, 2014
ECONOMIC OUTLOOK
Presented by: Bernard M. Markstein
Reed U.S. Chief Economist
3
4
5
6
Economic Outlook
7
The U.S.
Economy
Economic Outlook
8
State of the U.S. Economy
 Economy improving, but weather muddles the numbers.
What is really going on...
Economic Outlook
9
Risks to the Economy
 Energy (oil) prices
 The Fed and interest rates
 Significant cuts in governmen...
Economic Outlook
10
Construction
Outlook
Economic Outlook
11
700
750
800
850
900
950
1,000
1,050
1,100
1,150
1,200
1,250 Billion $, SAAR
Total Construction Spendin...
Economic Outlook
12
-40
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
3-Month Moving Average, Year-over-Year % Change
Reed...
Economic Outlook
13
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 1...
Economic Outlook
14
Residential construction is
recovering, but from a low level
 Single-family housing market is on the ...
Economic Outlook
15
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 2...
Economic Outlook
16
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 200...
Economic Outlook
17
0
50
100
150
200
250
300
350
400
450
500
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Thousands of Uni...
Economic Outlook
18
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 9...
Economic Outlook
19
100
150
200
250
300
350
400
450
500
550 Billion $, SAAR
New Residential Construction Spending
(3 Month...
Economic Outlook
20
-60
-50
-40
-30
-20
-10
0
10
20
30
40
50
60
3-Month Moving Average, Year-over-Year % Change
Reed Resid...
Economic Outlook
21
0
100
200
300
400
500
600
700
800
02 03 04 05 06 07 08 09 10 11 12 13 14 15
Improvements Single-family...
Economic Outlook
22
0
50
100
150
200
250
300
350
400
450
Single-Family Multifamily Improvements
$ Billions
2006 to 2013 ’1...
Economic Outlook
23
Nonresidential
Building
Construction
Economic Outlook
24
200
250
300
350
400
450
500 Billion $, SAAR
Nonresidential Construction Spending
(3 Month Moving Avera...
Economic Outlook
25
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
3-Month Moving Average, Year-over-Year % Change
Reed Nonresi...
Economic Outlook
26
275 269
283
302
340
404
438
376
290
284
298 299
310
336
0
50
100
150
200
250
300
350
400
450
500
550
0...
Economic Outlook
27
0
10
20
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Hotel/Lodging Office Commercial
$ Billions
2006 to 2013 ’14 ’15
Nonre...
28
0
10
20
30
40
50
60
70
80
90
100
110
Manufacturing Healthcare Education
$ Billions
2006 to 2013 ’14 ’15
Nonresidential ...
Economic Outlook
29
Heavy engineering
Economic Outlook
30
125
150
175
200
225
250
275
300
325 Billion $, SAAR
Heavy Engineering Construction Spending
(3 Month M...
Economic Outlook
31
Reed Heavy Engineering Starts
(3-Mo MA YoY)
Source: Reed Construction Data
-40
-30
-20
-10
0
10
20
30
...
Economic Outlook
32
171 171 169
185
208
248
272 274
265
251
272
263
275
299
0
50
100
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350
400
02 03 04 05 0...
Economic Outlook
33
0
10
20
30
40
50
60
70
80
90
100
110
120
Transportation Communication Power
$ Billions
2006 to 2013 ’1...
Economic Outlook
34
0
10
20
30
40
50
60
70
80
90
100
Highway Water and Sewer Conservation
$ Billions
2006 to 2013 ’14 ’15
...
Economic Outlook
35
Connect with Reed Construction Data
 Twitter
twitter.com/Bmarkstein
 Twitter
twitter.com/ReedConstrD...
Economic Outlook
36
Contact Information and Links
Bernard M. Markstein
 Office: 301-588-5190
 Mobile: 404-952-3381
 b.m...
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Charts on Construction for AGC Financial Issues Forum June 19, 2014

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Charts on residential and nonresidential construction presented to the Associated General Contractors of America (AGC) Financial Issues Forum June 19, 2014

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Charts on Construction for AGC Financial Issues Forum June 19, 2014

  1. 1. AGC Financial Issues Forum June 19, 2014
  2. 2. ECONOMIC OUTLOOK Presented by: Bernard M. Markstein Reed U.S. Chief Economist
  3. 3. 3
  4. 4. 4
  5. 5. 5
  6. 6. 6
  7. 7. Economic Outlook 7 The U.S. Economy
  8. 8. Economic Outlook 8 State of the U.S. Economy  Economy improving, but weather muddles the numbers. What is really going on?  Employment growing, but should be faster  Inflation moderate (too low?)  The Fed has started to taper  Housing/residential construction a positive
  9. 9. Economic Outlook 9 Risks to the Economy  Energy (oil) prices  The Fed and interest rates  Significant cuts in government spending in the near term  Europe  European government debt default  The euro
  10. 10. Economic Outlook 10 Construction Outlook
  11. 11. Economic Outlook 11 700 750 800 850 900 950 1,000 1,050 1,100 1,150 1,200 1,250 Billion $, SAAR Total Construction Spending (3 Month Moving Average) Source: History – U.S. Census Bureau
  12. 12. Economic Outlook 12 -40 -35 -30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30 3-Month Moving Average, Year-over-Year % Change Reed Total Starts (3-Mo MA YoY) Source: Reed Construction Data
  13. 13. Economic Outlook 13 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 15 Residential Nonresidential Building Heavy Construction $ Billions History Source: History – U.S. Census Bureau; Forecast – Reed Construction Data Forecast Forecast: Construction to improve Construction Spending and its Components
  14. 14. Economic Outlook 14 Residential construction is recovering, but from a low level  Single-family housing market is on the mend, but much further to go before it is back to normal  Multifamily market has largely recovered, but still some room for growth
  15. 15. Economic Outlook 15 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 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) Total Housing Starts (3-Month Moving Average) Source: U.S. Census Bureau
  16. 16. Economic Outlook 16 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 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) Single-Family Housing Starts (3-Month Moving Average) Source: U.S. Census Bureau
  17. 17. Economic Outlook 17 0 50 100 150 200 250 300 350 400 450 500 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 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) Multifamily Housing Starts (3-Month Moving Average) Source: U.S. Census Bureau
  18. 18. Economic Outlook 18 0 100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 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 (3-Month Moving Average) Source: U.S. Census -Bureau
  19. 19. Economic Outlook 19 100 150 200 250 300 350 400 450 500 550 Billion $, SAAR New Residential Construction Spending (3 Month Moving Average) Source: History – U.S. Census Bureau
  20. 20. Economic Outlook 20 -60 -50 -40 -30 -20 -10 0 10 20 30 40 50 60 3-Month Moving Average, Year-over-Year % Change Reed Residential Starts (3-Mo MA YoY) Source: Reed Construction Data
  21. 21. Economic Outlook 21 0 100 200 300 400 500 600 700 800 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Improvements Single-family Multifamily $ Billions Residential Spending Components Source: History – U.S. Census Bureau; Forecast – Reed Construction Data History Forecast
  22. 22. Economic Outlook 22 0 50 100 150 200 250 300 350 400 450 Single-Family Multifamily Improvements $ Billions 2006 to 2013 ’14 ’15 Residential Construction Spending Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
  23. 23. Economic Outlook 23 Nonresidential Building Construction
  24. 24. Economic Outlook 24 200 250 300 350 400 450 500 Billion $, SAAR Nonresidential Construction Spending (3 Month Moving Average) Source: History – U.S. Census Bureau
  25. 25. Economic Outlook 25 -30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30 3-Month Moving Average, Year-over-Year % Change Reed Nonresidential Building Starts (3-Mo MA YoY) Source: Reed Construction Data
  26. 26. Economic Outlook 26 275 269 283 302 340 404 438 376 290 284 298 299 310 336 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 $ Billions History Source: History – U.S. Census Bureau; Forecast – Reed Construction Data Forecast Nonresidential Construction Spending
  27. 27. Economic Outlook 27 0 10 20 30 40 50 60 70 80 90 100 Hotel/Lodging Office Commercial $ Billions 2006 to 2013 ’14 ’15 Nonresidential Construction Spending Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
  28. 28. 28 0 10 20 30 40 50 60 70 80 90 100 110 Manufacturing Healthcare Education $ Billions 2006 to 2013 ’14 ’15 Nonresidential Construction Spending Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
  29. 29. Economic Outlook 29 Heavy engineering
  30. 30. Economic Outlook 30 125 150 175 200 225 250 275 300 325 Billion $, SAAR Heavy Engineering Construction Spending (3 Month Moving Average) Source: History – U.S. Census Bureau
  31. 31. Economic Outlook 31 Reed Heavy Engineering Starts (3-Mo MA YoY) Source: Reed Construction Data -40 -30 -20 -10 0 10 20 30 40 50 60 3-Month Moving Average, Year-over-Year % Change
  32. 32. Economic Outlook 32 171 171 169 185 208 248 272 274 265 251 272 263 275 299 0 50 100 150 200 250 300 350 400 02 03 04 05 06 07 08 09 10 11 12 13 14 15 $ Billions History Source: History – U.S. Census Bureau; Forecast – Reed Construction Data Forecast Heavy Engineering Construction Spending
  33. 33. Economic Outlook 33 0 10 20 30 40 50 60 70 80 90 100 110 120 Transportation Communication Power $ Billions 2006 to 2013 ’14 ’15 Heavy Engineering Construction Spending Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
  34. 34. Economic Outlook 34 0 10 20 30 40 50 60 70 80 90 100 Highway Water and Sewer Conservation $ Billions 2006 to 2013 ’14 ’15 Heavy Engineering Construction Spending Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
  35. 35. Economic Outlook 35 Connect with Reed Construction Data  Twitter twitter.com/Bmarkstein  Twitter twitter.com/ReedConstrData  Facebook www.facebook.com/Reed-Construction-Data  LinkedIn www.linkedin.com/company/reed-construction-data  web www.reedconstructiondata.com
  36. 36. Economic Outlook 36 Contact Information and Links Bernard M. Markstein  Office: 301-588-5190  Mobile: 404-952-3381  b.markstein@reedbusiness.com  U.S. Forecast and Commentary: http://www.reedconstructiondata.com/market- intelligence/articles/  Blog: http://www.reedconstructiondata.com/market- intelligence/bernie-markstein/

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