Forecast: Impact of Double-Dip Recession on Construction Spending

Impact of Double-Dip Recession on Construction Spending

Negative news continues to flow and Reed Construction Data has lowered its baseline economic forecast and raised its subjective probability of a recession to 30%. Economist Bernard Markstein says the company is optimistic that the U.S. economy will avert descent into another recession, but the risk is real enough to consider what another recession might do to construction.

RCD's recession scenario anticipates GDP decline in the fourth quarter of 2011 through the third quarter of 2012, with a "mildly positive" fourth quarter 2012. Compared to their baseline, non-recessionary, 2012 forecast of 6.8% growth in housing-construction spending, if the country slides into recession again RCD expects housing spending to fall another 4.1% next year. Rather than 3.6% growth in non-building construction, they expect it to fall 0.9%.

(More on RCD's recession scenario . . . )