Panelists Forecast Slower Economic Growth at Dodge Outlook Conference

Window & Door
October 30, 2018
Meetings & Events
 Mike Petrullo, chief executive officer, Dodge Data & 
Analytics, introduces the 80th Dodge Construction Outlook
Conference, held in Washington, D.C. 

After several years of solid construction growth, the market will begin to ease in 2019, with the possibility of a recession in 2020, according to panelists at the 2019 Dodge Construction Outlook conference, held last week in Washington, D.C., and hosted by Dodge Data & Analytics.

U.S. Economy
Cristian deRitis, senior director, Moody’s Analytics, kicked off his session, “U.S. Economy: Major Issues 2018/2019,” by polling the audience. “Who thinks that in the next nine months, the economy will continue to perform well?” he asked. Most audience members raised their hands.

DeRitis continued on this optimistic tack, emphasizing the positives, including historically low unemployment and high quit rate, a sign of consumer confidence in the market, he explained. 

He also underlined the likelihood that longer-term economic modeling shows U.S. economic growth slowing in late 2018 and into 2019. Fading results of the tax cuts’ fiscal stimulus, increasing interest rates, combined with the volatility of tariffs, will contribute to the softening economy, he said.

Construction outlook
Robert Murray, chief economist, Dodge Data & Analytics, was similarly optimistic in his delivery of the 2019 Dodge Construction Outlook report. While he forecasts a deceleration of the construction market, in his presentation he emphasized that this only means a slowing of growth. “The fundamentals of the market are sound,” he said. “We are seeing deceleration, meaning a slower rate of growth—not yet a decline.”
Total new construction starts are up three percent in 2018 at $806.8 billion, and will hold essentially even at $808.3 in 2019, according to the forecast. Single-family housing, which enjoyed a six percent increase in 2018, will experience a flat rate of change in 2018, says Murray.
Murray predicted another interest rate hike in December of this year, with four more hikes likely to happen in 2019. He cautioned against reading too much into the hikes with regards overall construction growth, underlining the importance of long-term, not short term, rates in terms of construction growth. “The rates are not in a range to be shutting down activity,” he said. 

Like deRitis, Murray discussed a potential recession in 2020, predicting that if it happens, it will  not not be at the level seen in 2008/2009.