2022 Marcum National Construction Survey

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

Nonetheless, hope springs eternal. Approximately 60percent of respondents expect business to expand over the next three years. Not only was this higher than last year when only 54 percent of respondents believed that, but it was higher than pre-pandemic levels when the economy was red hot and thoughts of a pandemic were largely reserved for Hollywood blockbusters and scientists who fretted about such things seemingly without reason. In another remarkable twist of fate, despite rising costs, average project sizes are on the rise for nearly half of respondents. Contractors report, however, that the number of competitors has also been on the rise, another indication of normalcy being restored. In 2020, 56 percent of respondents indicated that the average number of competing bids for a project was between one to four, while 39 percent said it was between five to nine. In 2022, the rates were 38 and 43 percent, respectively. Among available categories, projects with ten or more bidders rose fastest, from roughly 5 percent in 2020 to 19 percent in 2022. LOOKING AHEAD Despite tightening monetary policy, the flow of capital through the veins of the U.S. economy remains abundant. While interest rates are not as low as they had been, they remain low by historic standards. Accordingly, investors are still on the hunt for yield, which often brings them into the realm of real estate and construction. For now, that translates into abundant private work. Public contractors also remain upbeat as America positions itself to vastly expand infrastructure investment over the next five years and perhaps beyond. But the emergence of storm clouds is apparent. While 2022 stands to be a year of economic growth, 2023 may not be as the Federal Reserve seeks to remove much of the fuel that has been catalyzing inflationary pressures. The distance from 8 percent inflation to 2 percent is vast. Should the economy buckle in 2023, history suggests that could portend fewer opportunities for contractors, particularly ones focused on private work, in 2024 and/or 2025.

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