Leading Economists Say Recovery is Underway, Architectural Billing is Up
May 10, 2012

by Penny Stacey, pstacey@glass.com

The recovery is underway. This was the general consensus among experts participating in a recent webinar that focused on the economy and the construction market. "We have seen a steep decline in nonresidential construction," said Kermit Baker, chief economist for the American Institute of Architects (AIA). "We seem to be at the beginning of a recovery now and the best indicator of that that we have is billing at architecture firms has been growing in recent months."

Baker was one of several leading economists who took a look at the nonresidential construction market and where it is headed during a webinar sponsored by the Associated General Contractors of America (AGC). The webinar, titled "A Construction Recovery at Last—but How Long and How Strong?," also featured Ken Simonson, chief economist for the AGC, and Bernard Markstein, chief economist for Reed Construction Data.

In making his predictions, Baker compared today's market to that of 30 years ago. "We're currently at the lowest levels of construction in 30 years, even though the economy's a lot larger than it was 30 years ago and the population's a lot larger than it was 30 years ago," he said. "We clearly have a lot of catch-up to do in terms of where we should be."

Baker was particularly optimistic about the commercial and industrial markets for nonresidential construction, but pointed out that the institutional sector, which he called "an unfortunately big piece of the puzzle," still remains down.

Simonson focused much of his part of the presentation on the stimulus programs that have come out in recent years-and the fact that many of these are now complete. "In a survey that AGC did at the beginning of the year of its contractor members, 51 percent said they had worked on a stimulus project but only 12 percent expect to, going forward," he said. "The stimulus is
definitely on the downward slope."

Overall, Simonson appeared hopeful for what's to come. "When you look at the different nonresidential segments, including private and public, you see a lot of numbers that have increased," he said.

He added, "Putting it all together what I expect to see this year as a whole is a little less volatility."

Markstein also was optimistic about the construction market as a whole. "Going forward I do expect to see growth but nowhere near where we were a few years ago," he said.

He predicted that nonresidential construction will see "a little flattening … and then further improvement."

Markstein also noted some recent surprises in the market. " … The first quarter is looking better than expected," he said.