Here’s a collection of news and data illustrating how the Green Industry is faring and what to expect. So far our industry has benefited from the little growth taking place. It appears we will continue to do so and have some interesting opportunities ahead.
ABC News Chief Economist, Anirban Basu commented on the Construction Backlog Indicator (CBI) numbers released for the first quarter of 2012. The CBI is a forward looking indicator for commercial and infrastructure construction.
The backlog declined about 5% for the quarter, but was ahead of one year ago. Basu is saying commercial construction will be flat for the year. Not great news for those who like commercial jobs. It is though what was expected by most analysis coming into the year.
Residential construction continues to increase. As of April the expected number of new homes built in 2012 is 30% more than 2011. Economists say a healthy new home construction rate is 1.5 million per year. 2012 should have about 717,000 new homes constructed, half the healthy rate. Still it’s improvement over the 2011 rate of 552,000 homes.
The national Association of Realtors tracks home values in 146 metro areas. Home values are on the increase in 74 metro areas. Another sign that the housing market is starting to improve.
Helping to support increased residential home sales are the increasing home and apartment rental rates. In many cities it is more costly to rent a place than to own it because homes can be purchased at such a low cost and financing is so cheap. Rental homes and apartments are seeing a vacancy rate below 5% and it’s been since 2001 that vacancy rates have been this low.
The Bureau of Labor Statistics reports that construction hiring has been declining month over month, yet 2012 will show an increase. By way of comparison, 2011 was the first year since 2006 that construction hiring increased. It’s been a long declining spell for the construction trades that is apparently over.
An indicator of continued slow growth is the Employment Participation Rate. Currently only 63.8% of the American public have a job. Until business growth demands increased hiring our nation’s economy will not see a growth rate above an anemic 2%.
Overall the U.S. economy will likely finish 2012 with a flat to slightly positive growth rate. Few analysts think we will see a recessionary condition even with Europe now in recession, the Chinese drastically slowing down, and the regulatory and tax conundrums we’re now facing. Good news. Most say 2013 show a 2% growth rate.
It’s easy to view the various indicator numbers and be pessimistic. Remember, those are the ones you hear about. The positive numbers get less press. When looking at all the numbers and analyzing the trending, it all points to slow growth for the next 2 years. Which is a lot better than negative growth! As one economist said, “We’re flying dangerously close to the ground, but this bird is still in the air.”
The quarterly UCLA Anderson Forecast is blaming part of our economic problem on a poorly educated work force. They say lacking educational conditions have existed for more than 40 years but have been covered over by the financial bubbles and otherwise good economic conditions. Now the poorly educated American public is showing its inability to fulfill the needs of today’s business environment.
Forecast Director Edward Leamer said in a CNBC interview that it will take years to recover an intellectual edge and our economy will reflect our progress. Leamer says the education system has to focus on the basics with extra effort on creativity and problem-solving skills. An interesting take.
The media is using the term “Fiscal Cliff” to describe the multitude of expiring tax breaks and new taxes all happening this January 1. Yes, there is a lengthy list of expiring tax cuts and new taxes to be worried about. If they all happen it would be an absolute catastrophe.
The analysts at the major financial firms are saying the politicals are very aware of the danger and tell them it will not happen. The politicians are already planning stop-gap measures to hold back most of the tax increases.
That’s good to stop a tax Armageddon, but the business world is looking for more certainty. We need to hear the politicians tell us the rules for the next 4-5 years so planning and implementation can take place. Give us that and watch the explosion of economic activity!
