... more than $14 billion,” says Murray. If you take that out, you do not have that spike and the resulting fall off in 2009, he notes.

Likewise, electric utility work will fall back from its extremely high level in 2008, but alternative-power markets such as wind and solar will stay brisk, says Murray. “If you are looking for any positive elements in the forecast, there is still a lot of momentum for construction related to renewable energy or green buildings.”

In times of economic stress, federal spending is the key to a recovery, and most forecasts assume a significant stimulus package from Congress early next year. But as of now, the outlook for federal construction programs is mixed.

Congress passed and President Bush signed appropriations bills providing funding for fiscal 2009 for Dept. of Defense and Dept. of Veterans Affairs programs, including substantial increases for military construction. DOD’s base realignment and closure program, which includes substantial funds for construction projects, received $9.2 billion for 2009, up 18% from 2008. DOD family housing construction was hiked 39%, to $1.4 billion, and other military construction got a 23% boost, to $12.2 billion.

At VA, the major construction account was pared 14%, to $923 million, but the department’s minor-construction program climbed 75%, to $742 million.

FORECAST 2009
U.S. Dept. of Commerce Construction Put-in-Place
$ billions (current dollars)
TYPE OF CONSTRUCTION ACTUAL 2007 ESTIMATE 2008 FORECAST 2009 PERCENT CHANGE
07-08 08-09
TOTAL CONSTRUCTION 1,137.1 1,065.5 985.9 –6.3 –7.5
RESIDENTIAL 499.7 367.3 321.4 –26.5 –12.5
Lodging 28.7 35.9 28.0 +25.1 –22.0
Office 64.7 71.2 58.4 +10.1 –18.0
Commercial 88.8 84.4 63.3 –5.0 –25.0
Health Care 42.9 45.5 46.4 +6.1 +2.0
Educational 96.3 103.0 103.0 +7.0 0.0
Religious 7.5 7.1 6.7 –5.3 –5.6
Public Safety 9.9 12.4 13.0 +25.3 +4.8
Amusement and Recreation 21.7 22.8 21.0 +5.1 –7.9
Transportation 32.4 35.0 37.1 +8.0 +6.0
Communication 27.0 25.7 24.4 –4.8 –5.1
Power 53.4 69.4 76.4 +30.0 +10.1
Highway and Street 76.0 79.0 82.2 +4.0 +4.1
Sewerage and Waste Disposal 24.7 25.4 25.4 +2.8 0.0
Water Supply 15.6 16.7 17.0 +7.1 +1.8
Conservation and Development 5.2 5.2 5.6 0.0 +7.7
Manufacturing 42.6 59.6 56.7 +40.0 –4.9
SOURCE: U.S. DEPT. OF COMMERCE
FIGURES FOR 2008 ARE ESTIMATED. FEDERAL INDUSTRIAL INCLUDES WEAPONS R&D AND PRODUCTION; ATOMIC-WASTE ISOLATION AND REPROCESSING AND ENVIRONMENTAL CLEANUP; CONSERVATION AND DEVELOPMENT, AS WELL AS ELECTRIC POWER DAMS.

Congress was unable to agree on full-year spending levels for most other federal agencies and instead approved a continuing resolution that extends their funding only through March 6, 2009, generally at their fiscal 2008 levels. That part-year funding affects such important construction programs as federal-aid high-ways, Corps of Engineers water projects, Environmental Protection Agency aid for wastewater treatment and drinking water facilities and General Services Administration federal buildings.

Last Leg

While the funding crisis for highway work and commercial projects has been widely reported, the third leg of the stool that makes up national construction spending––government and institutional projects funded by long-term bonds––has received less attention. By all accounts, those markets are dead in the water in the near term, stalled by the collapse of the long-term bond market in recent months.

As a result, the ripple effect of delayed projects that rely on bond financing—state and municipal, university programs, K-12 schools and hospitals— could have a major impact on the construction outlook for 2009.

FORECAST 2009
FMI: Construction Put-in-Place
$ millions (current dollars)
TYPE OF CONSTRUCTION ACCOUNT ESTIMATE FORECAST PERCENT CHANGE
2007 2008 2009 07-08 08-09
TOTAL CONSTRUCTION 1,137,151 1,039,938 963,298 –8.6 –7.4
TOTAL RESIDENTIAL 499,650 371,942 345,937 –25.6 –7.0
Single-Family 306,972 199,532 179,578 –35.0 –10.0
Multifamily 49,997 43,997 41,797 –12.0 –5.0
Home Improvement 142,682 128,413 124,561 –10.0 –3.0
TOTAL NONRESIDENTIAL 462,635 481,621 421,375 +4.1 –12.5
Lodging 28,728 31,601 22,121 +10.0 –30.0
Office 64,731 67,320 52,510 +4.0 –22.0
Amusements and Recreation 21,719 22,588 20,103 +4.0 –11.0
Religious 7,447 6,702 5,697 –10.0 –15.0
Education 96,348 101,165 93,072 +5.0 –8.0
Health Care 42,882 45,455 42,728 +6.0 –6.0
Commercial 88,777 84,338 66,627 –5.0 –21.0
Manufacturing 42,644 50,320 52,333 +18.0 +4.0
Public Safety, Administrative 9,899 10,889 10,453 +10.0 –4.0
Transportation 32,420 35,014 32,913 +8.0 –6.0
NONBUILDING STRUCTURES 174,866 186,735 195,986 +6.8 +5.0
Conservation and Development 5,226 5,331 5,490 +2.0 +3.0
Highways and Streets 76,021 78,302 83,000 +3.0 +6.0
Sewers Systems 24,665 25,405 24,897 +3.0 –2.0
Power 53,371 61,910 66,863 +16.0 +8.0
Water supply 15,583 15,427 15,736 –1.0 +2.0
SOURCE: FMI CORP., RALEIGH N.C.HISTORICAL DATA IS COMPILED FROM BUILDING PERMITS, CONSTRUCTION-PUT-PLACE, CLARK REPORTS AND TRADE SOURCES ESTIMATE FOR 2008 AND FORECAST FOR 2009 BY FMI.

The collapse started in January 2008 and was completed in September and October, says Matt Fabian, managing director of Municipal Market Advisors, a Concord, Mass.-based municipal-bond-market research firm. Longer-term bonds, the kind typically used for construction projects, are the least attractive to buyers remaining in the bond...