As we roll into spring, the U.S. economy's widely expected recession still has not quite arrived, despite months of dire predictions from many economists. In fact, in early March, Credit Suisse Chief Economist Ray Farris coined a new term, evoking Samuel Beckett's famed play about a title character who never actually shows up.
“It’s the ‘Godot recession',” Farris told The Wall Street Journal, referencing Waiting for Godot. Every six months, economists have predicted a recession six months later, he said. “By the middle of the year, people will still be expecting a recession in six months’ time.”
For now, though, even as the Federal Reserve continues to raise interest rates in its long, but only partly successful, effort to curb inflation, the U.S. construction industry still bulls forward. And the work is continuing at such a pace that worker shortages remain among the chief concerns for AEC firms also still wrestling with the supply chain and the lingering effects of the pandemic.
In many ways, it seems our industry is ignoring talk of recession and just moving forward on the sizeable amount of work before it. On March 14, Associated Builders and Contractors (ABC) reported that its monthly Construction Backlog Indicator had increased in February to 9.2 months, keeping the elevated measure at “highs not seen since the start of the pandemic.”
Taken just at its most basic face value, that number means ABC members believe they already have enough work on the books now to take them into 2024.
Similarly, the American Council of Engineering Companies (ACEC) Research Institute conducted its own quarterly membership survey in mid-January and heard from 583 firms. Overall, 41% of respondents said they felt positively about the condition of the U.S. economy, while 29% felt negatively. The rest were neutral. Of particular note, ACEC pointed out that the positive numbers reflected a sizeable, 12-point increase since the fourth quarter of 2022, and an extraordinary, 27-point “leap” from the data recorded in the third quarter.
So, what the heck is going on?
Well, it would seem the resurgent enthusiasm we encountered among exhibitors and attendees at AHR Expo in Atlanta this February is just imposing its will on the market. After three years of pent-up stir craziness caused by a global pandemic, perhaps the industry is just determined to flex its muscles and push projects forward.
Returning to that January ACEC study, it is also significant to note that “fear of an economic recession” did not even make the respondents’ list of biggest concerns for 2023. (By far, the top worry that engineering firms expressed was “continued upward pressure on wages” for staff!)
Likewise at AHR Expo this year; the biggest topic there was not recession, or even the pandemic. Instead, every row on the exhibit floor seemed to buzz with one word: "electrification."
So many new products now have that energy source as an option, but as our industry continues to decarbonize more and more — and rightfully so — many are worried at what cost that shift will take place. As Dr. Max Sherman, FASHRAE, states bluntly in our new print issue (as well as online), “In the short term, electrifying everything would be an unmitigated disaster.”
A retired staff scientist at Lawrence Berkeley National Laboratory, Dr. Sherman argues that currently, the national electrical grid simply is not yet ready for such a rapid and dramatic changeover. “The electric grid already teeters on the edge of collapse in many places,” he writes. “While investing in building electrification research will position us well for the future, implementing building electrification now is just too fast and too furious.”
I encourage you to read Dr. Sherman’s article and to join the debate online, or even on these pages. Our goal is to engage our audience and to help educate each other. No reason any of us have to wait on that.
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