Economic recovery to be gradual, predict experts at Outlook 2011
McGraw Hill Construction's Outlook 2011 Executive Conference opened Oct. 28 in Washington, D.C., at the Capital Hilton. Four hundred construction professionals registered for the conference, up from 350 last year, according to MHC staff.
Kathleen M. Camilli, president, Camilli Economics, New York, delivered the keynote address, "The Economic Outlook – A Slow Recovery."
"The recession -- December 2007 to June 2009 – appears to have ended last summer; the third quarter of 2009 was when the U.S. economy hit the bottom," she said. "It was the longest and deepest recession since World War II. If the financial markets lock up again, home prices continue to fall and oil prices continue to rise, the recession could be longer and deeper, and [we could] run the risk of 'a lost decade' like in Japan."
Housing had been in recession for three years, but seems to be stabilizing, Camilli said. Overseas partners are recovering, helping exports, but the dollar strength has hurt the trade deficit. The fiscal stimulus has helped boost the economy, but will be withdrawn in 2011. "The financial system appears to be stabilizing, but private nonresidential construction is still plunging," she said. "The economy will recover slowly."
Harvey M. Bernstein, vice president, Global Thought Leadership & Business Development, McGraw-Hill Construction, New York, presented "The Green Outlook 2011: Green Trends Driving Growth Through 2015."
"There's been a dramatic green market growth from 2005-2015," he said. "In the five years since 2005, the new green building market has grown six-fold." Even though the total construction market has shrunk, the demand for green has risen rapidly, he said. "Two-thirds of the market today is green construction. In 2015, it will be 50 percent, or $145 billion." The total residential and nonresidential new green building market in 2010 is going to be between $55 billion and $71 billion, he said. "Nonresidential new construction is expected to triple to $120 billion-$145 billion by 2015," he said. "Nonresidential major retrofit is expected to grow four-fold, to $4 billion to $18 billion by 2015."
Kermit Baker, chief economist, American Institute of Architects, Washington, D.C., gave a presentation, "The Outlook for Homebuilding and Residential Remodeling: When Will We See a Recovery?"
"Homebuilding recovery has been well below historical averages," he said. "As the market struggles to recover, excess housing supply inventory limits need for new homes, while low rate of household formations has been limiting demands." Mobility rates have been declining, and limited home equity and low mortgage rates are creating a "lock-in" effect that will slow mobility for years to come, he said. Remodeling industry recovery appears to be underway, and should pick up steam by year-end, he said. "Recently, remodeling niches, such as energy retrofits and renovating distressed properties, have helped revive a weak home improvement market." Market recovery is beginning at the lower-end of the price spectrum. "Industry is not likely to reach long-term production trend until 2013 or 2014," he said.
Other speakers at the conference included John Heilemann, co-author, "Game Change," and national political correspondent and columnist, New York Magazine; and Sandy Diehl, vice president, Integrated Building Solutions, United Technologies Corp., Washington, D.C.
The conference continues tomorrow.
Read related story.