CICPAC (Construction Industry CPAs and Consultants), an association of accounting professionals serving the construction industry, has published this informative year-end economic report specifically for contractors.
This report offers a comprehensive analysis of various economic factors that affect the construction industry, including:
Here is a sample of some of the insights included in the report:
Labor Situation/Labor Costs
The construction sector Employment Cost Index showed that overall labor costs are still high and climbing. It has been growing almost exponentially for several years and is now at 158.6. At the end of the recession in 2009, the index was at 111.6. That is a substantial hike and there is no sign of it reversing any time soon. The labor shortage could worsen dramatically by the end of the decade.
Interest Rates
The markets seem to be either trying to influence the Fed or they are in the mood to make sunny predictions. They are suggesting that rates will start to decline as early as Q2 and that there will be at least four quarter-point cuts in the course of the year. The Fed has not committed to anything but the “dot plot” suggests that these reductions will not occur until later in the year. The assumption is that rates would be near 4.5% by the end of the year in either scenario, but as always, the Fed will react to any threat of inflation.
DOWNLOAD THE CICPAC YEAR-END ECONOMIC REPORT FOR THE CONSTRUCTION INDUSTRY