December 2022
Chart:
Summary:
The Index shows a remarkable upward trajectory since its bottom in the spring of 2020, during the height of the COVID lockdown. Since then, it has been on a march upward in a very steady fashion.
There is a trend toward a flattening this past fall as the new home start numbers fall, but there is still strength in other construction sectors, especially the infrastructure activity spurred by the IIJA, which will pour $1.2 trillion into construction over the next few short years.
Despite the Chicken Littles who are beating the drum of a recession, I don’t see it in construction in 2023. I believe the Federal Reserve is working extremely hard to create a pillow-soft landing for the economy, and once inflation cools, interest rates will start a downward trend. With the IIJA money flowing, there won’t be enough time for our industry to fall into a recession.
When interest rates stabilize and inflation is tamed (late in 2024?), get ready for another broad economic expansion, and the boom times it will bring.