Article source: ConstructConnect

• Economists work under a disadvantage. Most of their signposts lie half a mile behind them. Readings on GDP, jobs, inflation, retail sales and foreign trade are quarterly or monthly. Data release schedules dictate that the latest numbers report on what has happened, not what is happening. In the current virus-induced crisis, events have turned negative with incredible rapidity. The first indications of extraordinary trouble came in daily interest rates and daily stock market quotations, both of which plummeted.

• Next in line has been the weekly U.S. ‘initial jobless claims’ number. For the week ending March 14, it rose by a substantial +70,000. In retrospect, that was nothing. For the latest week, ending March 21, it soared by +3.0 million. When its current level of 3.3 million is placed in a graph, it turns all previous readings into a flat horizontal line way down below near the x-axis.

• It was a big deal when initial jobless claims gradually receded from 670,000 in the last recession to near 200,000 only a short while ago. 3.3 million is five times the previous peak and nearly 17 times the recent trough. It’s an increase so massive, it’s impossible to fully understand the significance. It’s as if all the workers normally employed in Washington State or Massachusetts were laid off all at once.

• Three words are particularly pertinent with respect to recovery ‒ ‘containment’, ‘stratification’ and ‘antibodies’. Once the contagion is contained, either through social distancing or running its course, a restoration of some measure of normalcy will proceed automatically. ‘Stratification’ refers to who can return to work soonest, and that’s where antibodies become important. Younger people have more resistance to the lethal aspects of COVID-19. But there are also individuals who’ve lived through the illness or who contacted the strain, but never experienced many of the symptoms. They’ve built up antibodies. They qualify to go freely about their regular business.

• Finally, as some commentators have been pointing out, a side effect of the economic shutdown has been noticeably less pollution. Among all nations, Italy has imposed one of the most severe lockdowns. The water in the canals of Venice is said to be cleaner and clearer than it has been in centuries.

Article source: ConstructConnect

• A double-digit percentage decline in Q2 GDP, a huge jump in unemployment insurance claims and a $2 trillion stimulus package – numbers such as these are going to play havoc with multi-equation econometric models going forward.

• There’s much commentary in the media that the economy will quickly bounce back due to the ‘pent-up’ demand that is accumulating. While it’s true that on the other side of the ‘slump’, there may be large % gains in GDP, they will arise mainly from a low denominator in the calculation (i.e., a low base from which to grow.) Yes, people will rejoice in being able to return to the theater and go out for a meal. Previous recessions have shown, however, that with so many people losing their jobs, a great deal of paying down debt and attempts to build or re-build nest eggs will be taking precedence over consumer spending (70% of GDP).

• Longer term, the stimulus package will be inflationary. Tariffs are inflationary. It’s time to abandon, for a long while, any further talk of taking aggressive action on the foreign trade front. A likely pandemic-inspired move towards de-globalization of supply chains will do the trick on its own.

• If you’re wondering about possible backlash against aspects of the stimulus package, you might want to check out ‘#notdyingforWallStreet’ on social media.

Article source: ConstructConnect

With the world-wide spread of the new coronavirus, present days are delivering incredible uncertainty for everybody. Just the same, there are some ‘tectonic’ shifts underway that one can speak of with a fair degree of certainty, although some of the points listed below may not transpire exactly as set out.

Furthermore, there are going to be consequences that will seemingly appear out of nowhere, but which will later be viewed as embarrassingly obvious, leading to the question, “How could I have missed that?”

Also, keep in mind that I’m coming at this subject matter from an impact-on-construction point of view.

• We’re all going to be living on the Internet going forward even more than we already have been. A key implication is that individuals keeping telecommunications up and running are becoming ‘essential’ workers.

• In periods of past crises, it was ‘first responders’ who were the heroes. In the present coronavirus crisis, extra responsibility is being placed on ‘front-line workers’ ‒ i.e., those being required to risk illness while working with the general public in health care, policing and firefighting. More broadly, ‘front-line workers’ will also encompass grocery store and pharmacy staff, bank tellers and mechanics keeping machinery operating and vehicles on the road.

Read the rest of 14 Sure Bets and Other Thoughts Concerning our Unfolding World

Article source: ConstructConnect

ConstructConnect announced today that the latest month’s volume of construction starts, excluding residential work, was $23.8 billion (green shaded box, Table 3 below), a drop of one-quarter (-25.4%) versus January’s figure of $31.9 billion (originally reported as $29.7 billion). For the first time since January 2018, more than two years ago, there were no ‘mega’ project (i.e., valued at $1.0 billion plus) groundbreakings in the latest month.

The months of 2019 were brimming with mega projects. There were 35 altogether, or an average of nearly three per month, with a combined sum of $79.1 billion. In 2020, there has been only one mega project to date, January’s $2 billion people mover at LAX.

View this information as an infographic.
Read the rest of A Weak February for Nonresidential Construction Starts, -25% M/M and -10% YTD

Article source: ConstructConnect

In the Big Apple, 81% of New Home Starts are Multiples

There are 50-plus U.S. metro statistical areas with populations of more than one million. In most those cities, single-family housing starts still account for a larger share of total unit starts than multiples. (The latter are mostly to be found in condo and apartment towers.)

But in the biggest 15 cities, by population, more than half have multi-unit starts that exceed single-family starts. In other words, their number of units from multiples is now greater than 50% of their total number of units.

The statistics are based on residential building permits, but it is generally accepted by the analytics community that the words ‘permits’ and ‘starts’ can be used interchangeably.

Last year, in America’s three most populous cities, the shares of total units made up of multiples were as follows: New York, 81%; Los Angeles, 69%; and Chicago, 58%.

By the way, the Big Apple with a multiples-to-total ratio of 81% is, by far, the city in the U.S. with the most intense high-rise residential construction.

Read the rest of Cities with High-tech ‘Cred’ Foster Multi-unit Home Starts

Article source: ConstructConnect

Ten Years of +1.6% or More Annual U.S. GDP Growth

In the first quarter of 2019, the U.S. economy grew at a strong annualized rate +3.1%. In the subsequent quarters of the year, however, the rate of advance slowed by about one percentage point, to +2.0% in Q2 and +2.1% in each of Q3 and Q4.

For full year 2019, America’s GDP increase was +2.3%, down from +2.9% in the prior year (2018), but approximately on a par with the +2.4% from two years previously (2017).

The Trump administration has seemingly established +3.0% as the gold standard for annual GDP growth. There has been much discussion about how easily this is achievable.

Graph 1 provides the answer. There have been 20 years since the turn of the century. In only three of those years, has U.S. GDP growth been +3.0% or more. Furthermore, those three years were ‘front-end loaded’. They all occurred early in the first decade, between 2000 and 2005.

Since 2000, there have been an additional four years when annual GDP growth was just under +3.0%, at +2.9%. Those years were more scattered, coming in 2003, 2006, 2015 and 2018.

Well worth celebrating, though, has been the fact that U.S. annual GDP growth has been +1.6% or higher for the past ten years, from 2010 to 2019. Maintaining an upbeat economic cycle for such a length of time has been an extraordinary accomplishment.

Read the rest of +3.0% May Be the Goal, But +2.1% the Norm for U.S. & Canadian GDP Growth

Article source: ConstructConnect

Article source: ConstructConnect

Article source: ConstructConnect

The following are economic ‘nuggets’ gleaned from the latest
public and private sector data releases.

(1) Exceptionally Low Unemployment Rates, U.S. and Canada

Rightfully so, a big fuss is being made over how low the current (December 2019) U.S. unemployment rate is, at just 3.5%. The 3.5% level is a seasonally adjusted (SA) figure. On a not seasonally adjusted (NSA) basis, the U.S. jobless rate is even lower, at a mere 3.4%. What is being overlooked, however, is Canada’s remarkable performance on this front as well. The Canadian unemployment rate, when it is calculated according to the same methodology as in the U.S., is also minuscule. At just 4.2%, it’s less than a percentage point above America’s figure. (The name adopted by Statistics Canada for its NSA U.S.-equivalent unemployment rate is ‘R3’.)

Read the rest of Seven Mid-January Economic Nuggets