Regaining Our Footing
by Therese Dunphy, Editor-in-Chief
Predicting economic conditions seems to be more luck and art than science. It seems that whenever a recession begins, most economists don’t admit the presence of a recession until it has been underway for 12 to 18 months. Just look at the last two years.
Conversely, how long does it take to predict the bottom of the decline and the eventual improvement in market conditions? It’s tricky business. Clearer eyes than mine are poring over economic data for signs of better days.
With that caveat, here are some of the portents I’ve seen.
- Shovel-ready projects took off quickly following the Feb. 17 signing of the American Recovery and Reinvestment Act (ARRA). At press time, more than 2,000 transportation projects were funded.
- On April 10, only $12.8 billion of the $60.4 billion in available ARRA funds had been dispersed. This means that the 2,000 transportation projects are just the tip of the iceberg.
- As President Obama noted to the press, “projects are being approved ahead of schedule, and they are coming in under budget.” The Colorado Department of Transportation echoed this statement when it announced its first round of transportation projects noting that bids came in 12 percent under expectations. This is a bit of a double-edged sword. Projects are coming in under budget because contractors are desperate for work and are willing to take smaller margins to get the job. On the flip side, it may allow even more projects to be completed with the monies available.
- After months of layoffs, some construction materials companies are beginning to rehire workers. Both Lafarge and Ash Grove Cement announced plans to recall workers within recent weeks.
- As Daryl Delano reports, housing starts and building permits – although weaker than during the same period in 2008 – improved between January and February. Home sales are showing the same pattern.
- Finally, my local community showcases market changes. The city is laying new pavement on local highways and major streets. Numerous homeowners are starting residential remodeling projects. Community businesses are going beyond fixing potholes and putting in new parking lots.
It may be a case of seeing what I want to see, but it appears that the local area is no longer in the grasp of paralyzing economic fear.
Does this mean all is well? I wish it were so simple. A recession as difficult as the one we’re currently enduring will take time to dissipate. As more construction projects are approved, contractors and aggregate suppliers are likely to be less frantic to get the work and more likely to submit bids that give them a reasonable cushion. This is necessary for them to reinvest in their operations and their employees. To achieve long-term improvement, more than just stimulus dollars will be required.
ARRA appears to be giving the construction market a jump start, but ensuring adequate and appropriate investment is critical. Transportation reauthorization has always been an important issue for our industry and the nation, but never more so than now as momentum is necessary to turn around the economy.