At a recent presentation to Associated Builders and Contractors of Western Washington economist, Anirban Basu, spoke of the outlook for construction in the Northwest and throughout the country.
Basu said that the U.S. economy is in the mid-cycle of recovery with no imminent indication of a recession. The global economy is expanding at three percent annually with the U.S. growing at 2.5 percent. We are adding jobs in the U.S. although some people have a negative perception resulting from being paid less than they were prior to the recession. With low unemployment, consumer growth, which leads economic growth, remains strong so we can expect the economy to continue to grow, albeit slowly.
Washington is fourth in employment growth in the U.S. Construction is strong here in all markets especially in multifamily residential. Commercial construction starts in the region plummeted 40 percent in August but that is more a result of work started in downtown Bellevue on the massive Lincoln Square expansion in August 2014 according to Dodge Data & Analytics, a New Jersey-based company that tracks the North American construction industry. So that drop doesn’t portend a dramatic drop in commercial construction projects – with permitting agencies seeing new applications for projects in all commercial areas on almost a daily basis.
Single family construction will likely pick up in the next few years when Gen Y members begin to have children. The in-city life style of living in small apartments will change and people will seek single family homes to raise their families.
However Basu issued some cautionary notes: one that the Fed has not raised interest rates in nine years and the current economy is based on low interest rates so a raise in the near future could be highly disruptive; and two that we need to beware of government intervention in the market economy. The latter is especially important in Washington based on our current political climate. Both should be considered as we fill out our ballots this fall.