It’s can be both exciting and scary for contractors to gaze into the year ahead. Fortunately, the chief economist from Dodge Data & Analytics has been busy making predictions. Of course you can still give your old eight ball a shake, but you might find these insights helpful too.
Stability Then Recovery
According to Richard Branch, chief economist for Dodge Data & Analytics, the impact of a slow down “should be mild” for construction and recovery should be underway “in the back half of 2023.” Equipment World reports these additional predictions from Dodge Data & Analytics:
Overall, total construction starts rose 17% in 2022 and are expected to remain flat in 2023 – a relatively optimistic forecast for a period of anticipated economic stagnation.“There are a lot of projects sitting in the planning cycle waiting to break ground,” says Branch. “We’re sitting at 14- to 15-year highs in the Dodge Momentum Index, so it should provide some semblance of confidence and reassurance that developers and owners are continuing to put projects into the queue despite the fact that we’re concerned about what might happen when interest rates keep rising and the economy slows down in 2023.”
Constructors building for government, education and healthcare—the institutional sector— should experience stability:
Regions with strong demographic growth, such as the Carolinas, Florida, Texas, Nevada and New Mexico, will fare better than those with declining populations.Education starts will be led by the need to update legacy K-12 and college campuses for the next generation of students, as well as growth in the lab space. Sharing many of the same drivers as retail construction, healthcare is one of the biggest opportunities in the institutional sector. The segment includes inpatient hospitals, nursing homes and stand-alone clinics.
Work with airport upgrades, as well as transportation, environmental public works and infrastructure is expected to ratchet up and produce gains in 2023—especially if federal officials are able to get the infrastructure money moving faster:
- Government funding will provide stability for the institutional sector, which includes government, education and healthcare projects. Transportation will also see big gains in the form of airport terminal upgrades. JFK alone accounts for $11 billion in project funding in 2023.
- Environmental public works starts are all set to rise with dams/reservoirs up 15%; water supply systems up 12%; sewage and waste up 17%.
- Driven by infrastructure funding, infrastructure and public works projects are expected to see the biggest gains in 2023.
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Looking For A Slice Of The Action?
It can be complex to get in on the action of public projects—but it’s not impossible. A number of public and private organizations are helping contractors of all sizes “follow the money.” For example, the National Association of Counties offers this analysis which includes “a helpful list of open funding sources for county governments, as well as a matrix outlining all of the IIJA’s funding opportunities.” Contractors can visit the National Governor’s Association to track funding appropriations for their states. Other resources that may help contractors understand the scale and scope of opportunities and possibilities are right here.
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