[NEWS TRACKER] Economists Concerned US Headed Into Dangerous Economic Territory

Economists are concerned that recent Labor Department statistics fail to show the true picture of the economy due to the virus pandemic; plus more construction industry news on the August 20, 2020, edition of Construction News Tracker.

Construction News Tracker is presented by Caterpillar and produced by ForConstructionPros.com.

Statistics failing to show the true economic picture

10.2% is the nation's unemployment rate as of this date, even though employers added 963,000 jobs in the last week, a slight drop. But, that figure is certainly below the June employment figure of 4.8 million new jobs. Economists are seriously concerned that the recent Labor Department statistics fail to show the true picture of the economy due to the virus pandemic. The number of jobs remains far below pre-pandemic levels as construction alone has lost 444,000 positions since February. Some economists are cautioning that the country is headed into very dangerous territory.

COVID-19 certainly took its toll on the construction industry as reported by American Road and Transportation Builders Association (ARTBA). In fact, $9.6 billion worth of delays or cancellations have been wracked up by the pandemic. The ARTBA report shows 16 states announced infrastructure impacts worth $5 billion while another 20 local governments took similar measures amounting to $4.54 billion. Another 44 states are estimating projected declining revenue as a result of the virus crisis.

AGC official Brian Turmail is quoted as saying the association has no member that is not nervous about the foreseeable future when it comes to funding as private sector work as well as the large public sector jobs have all but dried up. AGC Chief Economist Ken Simonson says the nation experienced a 14% drop overall in employment numbers, or 62% in the nation's metro areas. It rebounded in May, but fell again in June.

AASHTO has asked Congress for an immediate infusion of $37 billion to states left reeling by the pandemic even as the expiration of the nation's Highway Trust Fund grows near at the end of September.

The Dodge Momentum Index for July moved upwards for the first time in 2020. The monthly measure  of the first report for building projects in nonresidentail planning registered 3.4% higher at 124.7 from its June revised report of 120.5. Since the December 2019 report the Dodge Data and Analytics report had lost 18%, with most of the decline in April at the height of the pandemic. Institutional planning had led the newest surge.

U.S. House passes appropriations bills

The U.S. House has passed a half dozen appropriations bills providing $107 billion to the U.S. Department of Tansportation for fiscal year 2021. The so-called Minibus bill, which includes a THUD measure for transportation, housing and urban development, is much larger than previous year's as COVID-19 funding was considered for the Federal Highway Administration and other agencies. The Senate is sitting on a COVID-19 relief bill awaiting action.

Construction spending on the decline

The Commerce Department reports another drop in construction spending for the month of June the fourth straight decline due to the epidemic. Spending on the nation's construction projects was off 7/10 of a percent in June as both nonresidential and home building activity fell. June home building dropped by 1.5% dragged down by a 3.6% fall in single family projects, although multifamily housing projects rose by 3% in the same time period.

Nonresidential construction rose by 2/10 of a percent to $812 billion as hospital, manufacturing facilities and hotel construction continued. Analysts had expected June spending to recover, but it did not.

Big companies choose cities for new facilities

Texas is the winner in the search for another Tesla Cybertruck factory. Austin, TX, edged out Tulsa, OK, for the $1.1 billion facility  Tesla's second plant to construct the new cybertruck. Elon Musk Company will receive $60 million in property tax rebates over 10 years along with $14 million from the county where the plant will be built and another $50 million from the school district. Twenty-one-hundred acres have been designated as the site of the Tesla factory, the company's largest auto assembly plant. Some 5,000 to 7,000 workers are expected to be employed at the factory, and construction is expected to begin in 2021.

Facebook has its 16th data center lined up for construction soon, in DeKalb County, IL. The 907,000-square-foot facility is expected to cost $800 million. The 505-acre site is located at DeKalb's Chicago West Business Center along state Highway 23. It's the 12th Facebook data center the company has built in the U.S. and supported by 100% renewable energy.

Mortenson Construction is the general contractor and expected to employ upwards of 1,200 construction workers onsite when the project gets underway early next year.

It’s a done deal. We're talking about Allegiant Stadium recently constructed in downtown Las Vegas. The $1.97 billion facility for the Las Vegas Raiders has received its certificate of occupancy as it met its 31 month construction schedule. Joint contractors Mortenson/McCarthy describe the 65,000 seat, 1.8 million-square-foot stadium as a vision of engineering marvel. Tt took two-plus years for completion, but it's unknown how many months before it can entertain fans to fill its seats.

In closing, a lot of people have great ideas, but nothing in the world is cheaper than a good idea with no action.

This is Construction News Tracker looking over the industry that makes the world a better place, presented by Caterpillar and produced by ForConstructionPros.com.

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