Ten Takeaways from the 2023 Forecast
NGA | Published on 12/5/2022
1. THE OVERALL U.S. ECONOMY IS HEADED FOR A SLOWDOWN
The U.S. economy is already showing early signs of a slowdown in response to notable economic concerns, such as inflation and rising interest rates, and geopolitical uncertainty, most notably from the continuing conflict in Ukraine. That slowdown will be felt in some—though not all-parts of the construction economy in 2023, according to leading building sector economists...
2. GEOPOLITICAL CONCERNS COULD UPEND FORECASTS
The economists note that all forecasts are based on current conditions. Any number of major domestic or international events could upend projections for the coming year. “Our forecasts assume that nothing else crazy happens in the world. What are those elements: China, Taiwan, further violent escalation in Ukraine, sustained production cuts from OPEC...
3. INFLATION WILL SLOW, AND INTEREST RATES WILL PEAK IN 2023
Despite the slowdown, construction industry companies should see some relief from rising costs as inflation begins to moderate. “Inflation seems to have crested,” says Baker.
Additionally, firms should also expect interest rates to peak in mid-year 2023 at 1.0 to 1.5 percentage points above current levels, says Baker...
4. IF THERE IS A RECESSION, IT WON’T BE A REPEAT OF 2008
Baker estimates that any potential recession in 2023 will be short-lived—“at about eight months”—and less severe.
Branch adds, “Next year will not be a repeat of what the construction sector endured during the Great Recession when the financial system collapsed...