SCHAUMBURG, Ill. The
long-bedraggled U.S. construction sector might be showing signs
of life, but more needs to be done about the nations
crumbling infrastructure, according to one economist.
Residential and nonresidential
construction fell steeply after the 2009 recession, but both
sectors are now seeing limited recovery, Bernard M. Markstein,
U.S. chief economist at Reed Construction Data Inc., Norcross,
"Looking forward, there is
improvement, but nowhere near where we were before the
recession," he said during a Sept. 11 presentation at the
Metals Service Center Institutes Economic Summit Forecast
In terms of residential
construction, the United States is "way below our long-term
needs" based on current demographic trends, Markstein said.
Still, growth has been slow, he added.
Despite housing prices and
interest rates plunging to historic lows, buyers are wary of
making big-ticket purchases because of uncertainty about their
jobs, Markstein said. In addition, smaller building
companieslike consumers and unlike giants such as Toll
Brothers Inc., Horsham, Pa.,also have difficulty
accessing credit, he said.
Still, housing prices have
generally stopped falling, which should boost buyer confidence
and lessen lenders trepidation, Markstein said. Assuming
new housing builds pick up, that for associated structures like
strip malls, offices and hospitals should follow, he said.
Markstein largely brushed off
concerns about falling home ownership, contending that the
trend would likely prove to be fleeting as younger people,
perhaps wary of buying houses in the wake of the housing
bubble, will eventually aspire to home ownership as the economy
By the same token, he also
questioned whether multifamily housing, comparatively strong
vs. other residential housing markets, would remain so. He
predicted that the sector could be strong for another one to
two years before running into danger of overbuilding.
But Markstein seemed to be less
bullish on the nonresidential construction sector,
infrastructure in particular, where funding is running out for
current projects and little work is in the pipeline to replace
Now is a good time to spend on
infrastructure because building services and material costs are
at historic lows, construction unemployment is high and the
United States will need better infrastructure if it hopes to
reshore manufacturing and other business, he said.
One reason companies look to
move back to the United States from abroad is that poor roads
and unpredictable power supplies overseas interfere with
business, Markstein said. In the United States, unexpected
power outages tend to be isolated incidents now, but they might
not be so rare in the future if the country does not invest in
its infrastructure, he warned.
Thats where we should be spending," Markstein said. While
such spending would lift government debt, it also would pay
dividends, he said, comparing such investments to repairing a
leaky roof, which adds to or preserves a homes value.