a building boom (as in 2000) to be followed by a two- to three-year collapse,”
he said. Instead, the market is basically
stalled for now, he said.
Haughey believes that for the economy in general, there is little risk of a
long or deep recession in 2008 and
2009. He pointed out that job losses are
only half of what they were in the last
recession and said the credit crisis has
[Editor's note: Haughey made this
prediction prior to the Wall Street financial catastrophe that took place in Sep-tember.]
He predicted, however, that materials
inflation for the construction and other
industries will last well into 2008 with
little pullback in 2009.
While Haughey believes that peak oil
prices are behind us, he said that high
and uncertain energy prices have pushed
business and consumer confidence down
to the recession level.
For construction, Haughey said the
challenges include the fall in confidence,
tightened mortgage lending standards,
soaring materials costs, lower than
expected commercial returns, inadequacy of funding of highways (at present)
and public building (soon to come), and
surplus inventories. However, he predicted all of those constraints will ease in
Prices of materials in particular will
continue as a challenge, however. Construction materials in structural steel,
for example, have risen 4.4% in the last
month, 22.8% in the last three months
and more than 28% for the year. Overall
heavy construction materials costs have
soared 2.5% in the last month, 8.4%
over 3 months and 15.7% over 12
Add to that the falling value of the
dollar and the increased demand for
materials from around the world, and
you have a situation where project plan-ners are nervous and raising prices to
cover their tracks. As a result, the construction industry may be “a little less
competitive,” Haughey said.
HAUGHEY’S FORECAST: Construction
spending will rise 4% to 5% by the end
of this year and rise by about 6.7% next
year. Volume of construction will rise 4%
to 6% by the end of next year, though it
will fall more before then. Non-residen-tial construction will rise by more than
10% by year end 2008 and by about
5.3% next year. VM
GENILEE PARENTE is a freelance writer/editor
based in Northern Virginia. Reach her at
email@example.com. JUDY TIBBS is editor-in-chief of
Valve Magazine. Contact her at firstname.lastname@example.org.
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