What are the construction industry’s top economic bellwethers?
Date Posted: September 8, 2019
Posted In: Discussion,
From ConstructionDive: President Donald Trump says he doesn’t see a recession on the horizon, noting that consumer confidence is high while unemployment is low.
“We’re doing tremendously well,” Trump told reporters on Sunday. “Our consumers are rich. I gave a tremendous tax cut and they’re loaded up with money.”
Even so, yesterday the president said he was “thinking about” cutting payroll taxes, a move that would put more money into consumers’ pockets. Also this week he called for the Federal Reserve to sharply cut interest rates, presumably to help stave off an economic slowdown.
Despite the recent signals from Washington, signs of a slowing economy have been worrying construction industry leaders for months. The Dow Jones Industrial Average dropped 800 points last week after the yield on the benchmark 10-year Treasury note briefly broke below the two-year rate, a phenomenon that has been a reliable indicator of economic recessions, according to CNBC.
In addition, a report last month showed construction spending slowing, despite predictions that it wouldn’t, and issues such as trade troubles, labor shortages and rising material prices have kept U.S. construction executives on their toes.
The industry relies on other lesser-known indicators as well, including the performance of equipment manufacturer Caterpillar — which reported weaker than expected earnings in July — and the AIA’s Architecture Billing Index, which has softened since February.
Construction pros say they are on the lookout for hints of a slowdown. For instance, Jay Badame, president and COO of AECOM’s Building Construction division, says he looks to design and architecture colleagues for signs of weakening.