FMI, Raleigh, N.C., expects construction installations to grow 2 percent in 2011 and 6 percent in 2012, to a total of $886.2 billion in construction, according to its “Construction Outlook: Third Quarter 2011 Report.” However, FMI cautions that in constant 2006 dollars, these numbers equate to 3 percent growth for 2012 and a 1 percent drop in construction for 2011, meaning that 2012 will nearly return to 2003 levels of construction in current dollars.
According to FMI, despite geo-political upheavals and constant debates about debt levels in the United States and Europe, budget brinksmanship in Congress, and a rash of natural disasters, construction markets are inching along. U.S. GDP is slow at 1.3 percent, but positive. The inchworm economy is struggling along, according to FMI, and it will take some time to revive an industry the size of U.S. construction. However, FMI notes that if businesses with record profits now held in reserve decide that they can make more with their money by investing in new R&D, plants, equipment and personnel, a new construction boom could follow. Conversely, if fear and risk aversion win out, FMI expects a second dip of recession to result.
FMI expects hard-hit residential markets to start to improve, especially multi-family construction, as banks continue to tighten financing requirements and homeowners are still reeling from the fears of foreclosure. Lodging, office and commercial construction will continue to struggle until more Americans have good jobs, FMI notes.
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