Growth Pulse Weakens but the Patient Is Still Healthy
The great thing about forecasts is that if you stick to your guns long enough, they come true. And that is what is happening. After years of defying economic predictions of its demise, the housing market has finally succumbed to its cyclical fate and headed south. Because single-family housing accounts for 54% of the dollar volume of all construction, according to U.S. Dept. of Commerce data, when housing heads down, its gravitational pull on construction statistics is significant. Unfortunately, the housing statistics are distorting stellar performances in virtually every other construction market.
This dichotomy between housing and all other construction is the theme that connects this year’s industry forecasts. In a rare state of unanimity among economists, all construction forecasts surveyed by ENR agree that if housing were subtracted from the equation, the industry would be looking at a big plus. As it is, most forecasts are calling for the dollar volume of construction next year to range from no growth to modest declines of 1 to 2%. The difference between optimists and pessimists hinges on their take of what the housing market will do in 2007.