In this first edition of Glass Magazine in 2024, we present our Annual Construction Forecast. To pull together the in-depth look at the year ahead, Glass Magazine’s Tara Lukasik waded through numerous prognostications from leading construction economists from Dodge Construction Network, the AGC of America, ConstructConnect, the American Institute of Architects, ITR Economics, and others. However, the takeaways are mixed.
Recession or soft landing
There is little agreement among economists about what 2024 will hold. They are split over whether the overall economy will enter recession—59% of economists say there is a 46% chance the U.S. will enter recession in 2024, according to Bankrate’s latest quarterly survey of economists, published in fall 2023. They are split over labor market expectations. Over interest rate projections. Over the future of inflation.
Construction economists are similarly split in their expectations for the coming year. During a presentation at 2023 GlassBuild America, Connor Lokar, senior forecaster, ITR Economics, projected that the overall U.S. economy will most likely enter recession in the coming months, with nonresidential construction beginning to feel the effects in late 2024. However, Richard Branch, chief economist, Dodge Construction Network, expressed confidence that the U.S. will remain “recession-free” and end 2024 “on much more stable footing.”
Consensus in construction forecasts
There are some areas of consensus. Most sector economists anticipate a softening in the commercial sector, a significant falloff in multifamily, but a rebound of single family. They also align over expectations for key market drivers, such as supply chains (expected to continue to normalize); material inflation (slowing, with “relief” in sight, says Dodge’s Branch); labor (still tight, with wages rising); and interest rates (turning around from their painfully high levels).
On the ground
Despite what forecasters say about the state of the economy, many in the glass industry say they are already feeling a slowdown in the market. The on-the-ground message I’m hearing from some is that backlogs are generally down. High inflation and interest rates have taken a toll, and credit is becoming less available. Many are looking to 2024 with some concern over the state of projects in the pipeline, their ability to get paid and to manage material cost increases. “Work is slowing down, and some players are getting caught crosswise on inflation,” said one glazier I spoke with in early December.
Opportunity to focus
Despite the uncertainty, economists note that slowing growth can offer business opportunities. A slowdown will give the construction industry its first “breather” before the pandemic, according to ITR’s Lokar. “You’ll have an opportunity to get the house in order. You’ve spent three to three and a half years surviving the pandemic, with unprecedented supply chain issues, inflation pressures and turnover. You’re going to be able to breathe. … Think about everything you’ve said ‘no’ to over the past two or three years. That’s what you can bring back to the front burner.”