Constructor - May/June 2017 - 27

SIMONSON SAYS

Opportunities Grow but So Does Uncertainty
BY KEN SIMONSON
CHIEF ECONOMIST, AGC OF AMERICA

CONTRACTORS WENT INTO 2017 with greater optimism than

they had expressed since before the 2007-2009 recession.
Since the year began, however, multiple varieties of uncertainty
have cropped up.
The construction industry went on a hiring spree in January,
bringing on board 344,000 employees - the most for January
in 10 years. Job openings at the end of the month dipped compared to a year earlier.
The bumper crop of new hires exceeded retirements and other
separations, as total payroll employment in February climbed
to the highest level since late 2008. That's good news for an
industry that expects to have plenty of projects to keep those
workers busy over the next year.
While contractors have reason to be optimistic about overall
demand for construction, there are new areas of uncertainty.
Foremost among these may be immigration policy. The U.S.
economy has becoming increasingly dependent on foreignborn workers to fill spots vacated by the ever-growing number
of retiring baby boomers at a time when the number of new
entrants to the workforce has leveled off. Contractors may soon
face even more competition from other industries for workers,
if fewer immigrants are allowed into the country and more
leave, whether voluntarily or otherwise. A reduction or reversal
of net immigration in some regions could also reduce demand
for construction of housing, schools, retail and other facilities
and could negatively affect local and state revenues that fund
public construction.
Trade policy could affect the outlook for construction in multiple ways. There may be more demand for factory construction
as some multinationals expand or locate production in the U.S.
But many exporters, freight transportation businesses and ports
may lose customers if trading partners take countermeasures

The U.S. economy has becoming
increasingly dependent on
foreign-born workers to fill spots
vacated by the ever-growing
number of retiring baby boomers
at a time when the number of
new entrants to the workforce
has leveled off.

against restrictive U.S. trade initiatives. Some contractors are
also vulnerable to price spikes for products that currently are
imported or face price competition from imports.
Uncertainty over what health care legislation will be in place
a year from now, and what it will mean for hospital utilization
and reimbursement rates, may stall hospital construction and
renovation projects. Similarly, there is uncertainty about how
a rewrite of the tax code will affect the treatment of interest,
building depreciation and credits for low-income housing or
renewable energy.
There is even greater uncertainty than usual about the
federal budget. The initial proposals from the White House
would cut a variety of construction funding categories, but it is
unclear whether Congress will go along with these requests.
Some policy proposals may add to contractors' order books
or lessen their costs. Already, several onerous proposed and
finalized federal regulations, executive orders and agency
practices have been rolled back or modified. Numerous oil and
gas pipeline projects that had been blocked or stalled are now
under construction or moving through the approval process.
Those projects will generate work directly for some contractors
and also "downstream" for businesses that will have access to
cheaper energy and feedstocks or for export facilities.
Policy uncertainty looks to be part of the "new normal" for the
economy and the construction industry. But so far, those clouds
have not darkened a generally sunny outlook for contractors
in 2017.
◆

@Constr uctor Ma g

MA Y / J U N E 2 0 1 7 | www.constructormagazine.com 27


http://www.constructormagazine.com

Table of Contents for the Digital Edition of Constructor - May/June 2017

Editor’s Note
President’s Message
CEO’s Letter
Selling Construction as a Career: A New Approach to Recruiting the Next Generation of Workers
Chapter Connection
Daytona Rising: Fast & Furious … & Victorious
Chapter Connection
Simonson Says
Making Safety Second Nature: W.S. Bellows Construction Wins Top Safety Award
Technology Toolbox
Digging It: Excavators Dish Dirt on Staying Competitive in an Ever-Changing Market
Member and Chapter News
Products & Services Marketplace
Equipment Guide
Index to Advertisers
Final Inspection
Constructor - May/June 2017 - Intro
Constructor - May/June 2017 - cover1
Constructor - May/June 2017 - cover2
Constructor - May/June 2017 - 3
Constructor - May/June 2017 - 4
Constructor - May/June 2017 - 5
Constructor - May/June 2017 - 6
Constructor - May/June 2017 - Editor’s Note
Constructor - May/June 2017 - 8
Constructor - May/June 2017 - President’s Message
Constructor - May/June 2017 - 10
Constructor - May/June 2017 - CEO’s Letter
Constructor - May/June 2017 - Selling Construction as a Career: A New Approach to Recruiting the Next Generation of Workers
Constructor - May/June 2017 - 13
Constructor - May/June 2017 - 14
Constructor - May/June 2017 - 15
Constructor - May/June 2017 - 16
Constructor - May/June 2017 - 17
Constructor - May/June 2017 - 18
Constructor - May/June 2017 - Chapter Connection
Constructor - May/June 2017 - Daytona Rising: Fast & Furious … & Victorious
Constructor - May/June 2017 - 21
Constructor - May/June 2017 - 22
Constructor - May/June 2017 - 23
Constructor - May/June 2017 - 24
Constructor - May/June 2017 - Chapter Connection
Constructor - May/June 2017 - 26
Constructor - May/June 2017 - Simonson Says
Constructor - May/June 2017 - Making Safety Second Nature: W.S. Bellows Construction Wins Top Safety Award
Constructor - May/June 2017 - 29
Constructor - May/June 2017 - 30
Constructor - May/June 2017 - 31
Constructor - May/June 2017 - 32
Constructor - May/June 2017 - 33
Constructor - May/June 2017 - 34
Constructor - May/June 2017 - 35
Constructor - May/June 2017 - 36
Constructor - May/June 2017 - Technology Toolbox
Constructor - May/June 2017 - Digging It: Excavators Dish Dirt on Staying Competitive in an Ever-Changing Market
Constructor - May/June 2017 - 39
Constructor - May/June 2017 - 40
Constructor - May/June 2017 - 41
Constructor - May/June 2017 - 42
Constructor - May/June 2017 - Member and Chapter News
Constructor - May/June 2017 - 44
Constructor - May/June 2017 - 45
Constructor - May/June 2017 - Products & Services Marketplace
Constructor - May/June 2017 - 47
Constructor - May/June 2017 - Equipment Guide
Constructor - May/June 2017 - Index to Advertisers
Constructor - May/June 2017 - Final Inspection
Constructor - May/June 2017 - cover3
Constructor - May/June 2017 - cover4
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