2022 Marcum National Construction Survey

Despite Headwinds, Contractors Remain Upbeat continued By Anirban Basu, Chief Construction Economist

It has stayed below that threshold for each of the past 12 months as employers cling to their workforce, even members who are underperforming. Enormous efforts being undertaken to retain and recruit staff are among the numerous factors contributing to inflation. According to the Consumer Price Index, prices rose another 0.3 percent in April and are up 8.3 percent over the past year. But the 8.3 percent figure was a bit below the year-over-year peak achieved the prior month, and there are a growing number of economists who believe that inflation has peaked. A separate measure of inflation, the personal consumption expenditures price index, produced its first slowdown since November 2020, another indication that inflation is moderating. While that’s good news, early signs of moderating inflation have yet to alter the Federal Reserve’s attitude toward near-term policymaking. In March, the Federal Reserve raised key short-term rates that it controls for the first time since 2018. That increase was a quarter percentage point, and put the federal funds rate in a range between 0.25-0.50%. In early May, the Federal

Reserve raised rates by another half a percentage point. Similar increases are anticipated for both June and July. In short, the cost of capital is rising at a time when consumers and other economic actors are still wrestling with shortages and rising prices. The Federal Reserve is attempting to engineer a soft landing. They seek to slow the economy to wring inflation and inflation expectations out of the system without driving the economy into recession. But the Federal Reserve’s record of engineering soft landings is far from stellar. Since the early 1980s, there have been eight rate- tightening cycles. Six have ended in recession.

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