One difference between construction economists and their Wall Street cousins is that construction economists tend to be risk adverse, especially in their forecasts. On the other hand, their Wall Street brethren appear to have been risk oblivious, especially when it came to leveraging sub-prime mortgages to the hilt. Last year, most of these economists alluded to problems in the housing market in their forecasts but none predicted the total collapse that would follow in 2007.

As a result, last year’s predictions of modest declines, or modest increases, turned into an actual decline in the value of new total construction ranging from 5% to 8%. Most of this was due to a 25% drop in the value of new residential construction. The impact of the housing crisis would have been even worse except for another unpredicted event, double-digit growth in nearly all the nonresidential building and public works markets.