Every month there are new conditions affecting our broad economy, the construction trades, and the Green Industry! This month the big talk is the panicked reaction to England’s vote to leave the European Union.
The European Mess
For how many centuries was England an independent nation? They’ve been a member of the EU for 20 years. Yet so many in the press are talking about moving into “uncharted territory.” What? All this talk of doom is highly overstated.
The EU is in for more challenge. But, life will go on and everything will settle in. That’s not to say there will no pain points for Britain, the EU, and the United States. How painful will be determined by the politicians response. For example, will the U.S. playball with the UK and quickly negotiate new trade agreements or will the U.S. seek to “punish” the UK?
All the major players have it in their best interest to quickly iron out agreements. Every economy is performing sub standard and cannot handle any major blows. Self interest will eventually rule the day with practical politicians. Those guided by emotion or partisan political agendas will be the problem. In the end, odds are that reason will prevail.
America is Still Growing
Back here in America, the economy is still moving along at it’s low growth rate. The construction trades are growing at twice the pace of the general economy. The Green Industry is on fire!
The US industrial production is flat right now, but still expected to up in the fall. Consumer spending is very strong. We will have another year of 1.5 to 3% growth. Not exciting, we should be around 5%, but given the conditions mostly caused by worldwide political meddling’s, we’re not doing too bad.
Of course there are always concerns. One that bugs me is the low growth of wages. For most Americans wages have been stagnate since the recession. Because our economy is being driven more by consumer spending that industrial production, how long will the consumer keep buying? Prices have been slow to rise and financing is still cheap. But, home values are increasing to the point that many home buyers are being priced out of the market even with the low mortgage rates. People need to see there wages increasing.
The Green Industry and the construction trades have been growing for several years and it is projected to keep growing for a few more. Labor is tight as firms try to add capacity to handle all the work. A big factor driving new business is home renovation. People continue to invest in their properties; especially to improve the outdoor living environment. Our industry will benefit in many ways for several years.
Some Interesting Numbers:
- The average effective tax rate of all businesses in the US is 23%.
- The average effective tax rate of businesses in the construction trades is 30%. Lucky us. We don’t have all the special tax programs other industries enjoy. The construction industry is paying highest effective tax rate of all businesses. We’re paying more than our “fair share”.
- In 1973 39.5% of construction trade workers were unionized. In 2015 only 13.2% belonged to unions.
- Home sales in April set a new post recession high.
- Construction employment grew in 42 of the 50 States in the last 12 months.
- Home sale prices increased 9.7% in the last 12 months.
- Home inventories dropped to a 4.7 month supply. Which is on the low side.
- Diesel fuel prices in our region have increased 17% since February. But nationally, diesel prices are still less than one year ago.
DOT Smart City
The US Dept of Transportation has been looking for a city to be a test project for their Smart City concept. Here’s how they describe it, “first of its kind city that uses data, technology, and creativity to shape how people and goods move in the future.”
The list of possibles is now down to 7 cities. The winning city will receive $40m from the DOT plus contributions from private sector companies. It will be a test case before expanding the concept to other cities.
Not sure how much overall benefit the Green Industry will see. However, we have two cities in our region on the finalist list of 7 cities. Columbus and Pittsburgh.