Despite the headline-grabbing attention of federal deficits and budget cuts, the real problems facing construction remain the prolonged recession in the private nonresidential building markets, the weakening of the once-dependable public markets, a stalled housing recovery teetering on the brink of slipping back into recession and high unemployment. That does not add up to a quick recovery, which in turns equals low inflation abetted by desperate bidding. The sudden turnaround from the Keynesian economics of stimulus to the Hoover-era economics of austerity only make the outlook bleaker.
“What we are seeing is suppliers trying to bump up prices and the industry wondering if it has enough work to support those increases. Last year quite a few price increases did not stick,” says Julian Anderson, principal with Rider Levett Bucknall. The RLB construction selling price index shows an annual increase of just 0.7%.