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Growth of Timber Buildings
Construction Goes Techy
Markets Seek Direction
Construction
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In this article we revisit the increasing popular construction method - Mass Timber Construction
Here we examine the ways technology is changing the design and construction process.
The big question that the markets want answered is when will interest rates come down, and that depends on when the Fed will get the inflation rate it feels comfortable with, which in turn gets influenced by other world events and what happens in the political sphere. The strength of the general market makes it look as though there's not likely to be much, if any, reduction in interest rates this year, keeping the cost of investing in new projects high.
The jobs market has stayed strong with 275,000 new jobs reported for February, showing an increase over the revised total of 229,000 for January. Healthcare, hospitality and leisure, and government were the leaders in new job creation, but construction was also showing increases. The resulting low unemployment rate keeps the pressure on wage rates, and consequently on inflation, and pay increases to retain and attract construction workers seems to be running around 5% or more ahead of the general employment market. AI certainly doesn't seem to be taking away the jobs at present, and its main effect for construction is in the additional construction work required by companies trying to grab their share of the AI market.
Material costs have shown to be stabilizing, and, in some cases, coming down, but not fast enough for many. With construction materials, the ENR Materials Price Index was 3519 in January 2020 at the start of Covid and 6249.77 in January this year. That's an almost 75% increase, averaging out at 15% per annum. The index shows a 1.61% increase between January and March this year, so annual inflation of construction materials still seems to be running ahead of overall inflation.
Consumer spending is a major part of the US GDP, and retailers have been reporting a trend in consumers cutting back on discretionary spending. That is a result of food costs and the cost of housing continuing to increase. Consumer credit card debt has been reported as being high, but after taking inflation into account it's not a significant change, and most of that debt is paid off monthly, so consumers seem to be okay.
Of bigger concern might be the banks that are affected by the retail and commercial loans coming under pressure from the interest rates and as shops and offices adapt to the changes in people's habits following the pandemic. We've also been facing potential government shutdowns, with more of the same to come as the budget battles work their way through Congress.
Yet, for all that, the commercial, industrial, and investment markets have been holding up, confirming the strength of the economy, despite high interest rates. And high interest rates mean that the Fed has an easy way to boost the economy, if needed. That's all good news.
Geoff Canham, Editor, TBD San Francisco
Design consultant: Katie Levine of Vallance, Inc.