Forecasters Predict Bottom is Near-If Not Here; Optimism Seems to
be Prominent Theme Looking Ahead
April 23, 2009
A semi-annual construction forecast held today in Washington, D.C.,
by the National Association of Homebuilders (NAHB) held a much different
theme than the group's most recent forecast, held in October of
2008. Many economists who spoke today predicted not only that the
bottom of the construction market is hopefully nearif we're
not already at bottom-but many even shared an optimism not seen
recently in such forums.
David Crowe, chief economist for the NAHB, shared several reasons
he believes it's nearing an end.
One of these is the work of the Federal government to revive the
"The Fed has done virtually everything they can think of,
and probably sill have some tricks up their sleeves," he said.
"They continue to surprise us."
The fact that some material prices down also is a positive, he
"When there is an opportunity to build, there's at least downward
pressure in the underlying material prices," Crowe said.
Maury Harris, an economist with UBS Securities LLC, shared this
"We've seen the downturn in house prices, we've seen the recession,
but the good news is, I'm finally turning into an optimist,"
he said. "I think the second half of the year we're going to
see a turnaround."
He added, "We think the worst is behind us."
Regarding the credit crunch, Harris said he thinks that lending
standards will soon easeat least in the mortgage area, if
not more widespread.
James Glassman, an economist for JP Morgan Chase, also applauded
the government's efforts to revive the economy.
"We all have complaints about what's going on [in Washington]
" he said, "but the truth is, if you look at the
actions we're taking, [I] thank God."
Glass believes these actions have led to a global action for which
the U.S. construction market also should be thankful.
"It's important to keep in mind that others around us are
following the lead of the United States," he said. "We've
all become less negative in how we think about the future because
we're watching the Japanese do the same thing, the Chinese doing
the same thing, those in India doing the same thing
Glassman also recalled where the economy's been-noting that it's
"After Labor Day, we really were at the gates of hell,"
he said. "It all began with the rescue of the GSEs
was the event that changed the whole course of matters. The legs
just went out, and people said to themselves, 'There's a problem
But he still holds hope for near future.
"There are all kinds of things going on that make us think
we're in a transition and things are going to turn around,"
One area he pointed to is the oil crisis-and the fact that oil
prices are still somewhat low compared to their Summer 2007-Summer
"If we'd known oil prices were going to explode the way they
did, we pretty much would have told you that the surge in oil prices
would slow us down by 1 or 2 percent," Glassman said. "The
point of this picture is to remind you that this oil phenomenon
was once a headwind, but now it's a tailwind."
Glassman also addressed the credit market.
"The second reason to be optimistic is that if credit shut
down production last fall, the opening of credit and the normalization
of credit flows is going to release some pent-up demand," he
Need more info and analysis about the issues?
HERE to subscribe to USGlass magazine.