2020 Marcum National Construction Survey

2020 MARCUM NATIONAL CONSTRUCTION SURVEY

Already, the current downturn is different from the prior one. In this instance, construction’s deterioration didn’t begin prior to the broader economic downturn, but coincidentally. Still, the Great Recession represented a period of significant economic decay, and this one shares that characteristic. Marcum’s survey responses are consistent with the notion that operating a construction firm will be more challenging going forward than it was during a time of brisk demand. Prior to the COVID-19-induced downturn, many contractors found that they weren’t overwhelmed by massive numbers of competitors. For instance, more than half of respondents indicated that the number of competing bidders they encountered was usually quite modest, in the range of one to four bidders. Another 40 percent indicated that they routinely squared off against five to nine bidders.

Construction’s recession came earlier, largely due to a collapse in single-family homebuilding attributable to mass mortgage delinquencies and defaults that emerged in 2005 and 2006. On an annualized basis, construction spending peaked in early 2006 at a bit more than $1.2 trillion. By recession’s end, construction spending stood at around $907 billion, a decline approaching 25% from the pre-recession peak. But while construction entered the recession early, it left late. As is often the case, construction’s fortunes lagged behind those of the broader economy. Even as the economy began to expand, construction spending continued to wane. The bottom didn’t come until early 2011. By that point, construction spending was down a massive 37% from its pre-recession peak.

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