Although the strength of individual markets is shifting, our forecast for total construction put in place for 2013 continues to show an increase of 8% over 2012 levels. The forecast total for construction in 2013 is $918,897 million, a solid improvement, but we don’t expect to return to the days of annual construction above the trillion-dollar mark until 2015. The star of the show is residential buildings with a 23% rise in single-family buildings. In the early months of the Great Recession, it seemed that nonresidential construction would manage to hold enough momentum to carry it through even though residential construction was tanking. It might have made it if the recession had been of the brief variety. We are now seeing a lag on the upside as commercial, lodging and office construction finally start to pick up.
While much of business is still in wait-and-see mode, some are breaking the mold and planning for growth. Then there is the power industry, oil and gas exploration is booming in the rich shale regions. These booming regions buck the trends across the nation, with rising labor costs and need for housing and construction of roads, rail and pipelines to move the product from the fields to refining and distribution sites. The potential for greater energy independence and lower energy prices is helping to make the U.S. more competitive in the global market and enticing more manufacturing to relocate in the U.S., and that is not just American companies. While low interest rates, rising material and labor costs as well as the growth in housing sales and construction smack of a coming period of inflation, so far, the consumer price index remains relatively tame. Nonetheless, higher interest rates are inevitable down the road, but most economists don’t expect that to happen this year.