Digging into Construction Data NABE Real Estate/Construction Roundtable webinar, April 8, 2010 Ken Simonson, Chief Economist AGC of America

Economic impact of nonresidential construction Jobs: 28,500 per $1 billion 1/3 direct, onsite construction 1/6 indirect (quarries, mfg., services) 1/2 induced by spending from higher earnings of construction, indirect workers and owners GDP: $3.4 billion Personal Earnings: $1.1 billion 2 Source: Prof. Stephen Fuller, George Mason University

Construction Spending, Source: Census Bureau, Bureau of Economic Analysis $16,000 $15,000 $14,000 $13,000 $12,000 $11,000 $10,000 $2,000 $1,000 $0 Construction GDP GDP and Construction Spending (SAAR Annual Level, $ in billions) Construction as a % of GDP

4 Private Nonresidential ($303b, -0.4%, -24%) Public ($293b, -1.7%, -5%) Private Residential ($251b, -2.1%, -3.8%) Source: Census Bureau Total Construction ($846b, -1.3%, -13%) Construction spending by segment, 1- & 12-month change Seasonally adjusted annual rate (SAAR)

Single-family (SF) vs. multifamily (MF) vs. 1/10vs. 2/09 SF 0%4% Improvements -4%4% MF 0%-52% 5 Permits vs. 1/10vs. 2/09 SF 0%32% MF -8%-36% Starts SF 0%40% MF -30%-65%

Housing outlook SF: starts, permits should rise throughout 10 MF: No improvement likely until 11 - Rental demand hurt by job losses among would- be renters and by first-time homebuyer credit - Supply swelled by owners and banks who are trying to rent out houses and condos - Banks remain unwilling to lend to developers Source: Author 6

Nonres totals (billion $, SAAR), share, 1- & 12-month change 2/10 TotalSharevs. 1/10vs. 2/09 Nonresidential$588 billion 100 %- 1 %- 16 % Educational Power Highway and street Manufacturing Commercial Office Health care Transportation Sewage and waste disposal Communication Amusement and recreation Other (lodging; water, public safety; conservation; religious): 9% of total 7 Source: Census Bureau

Construction spending: industrial, heavy (billion $, SAAR) 2008, 2009,

9 Construction spending: public works (billion $, SAAR) 2008, 2009, 2010

10 Construction spending: institutional (private + state/local) 2008, 2009, 2010

11 Construction spending: developer-financed (billion $, SAAR) 2008, 2009, 2010

Predictors of construction demand 12 Architecture & engineering services empl. Source: American Institute of Architects, BLS

Summary for 2010 Nonres spending: 0 to -5% (more stimulus put in place, maybe gains in retail, higher ed, hospitals) Res: +5 to +10% (SF up, MF down all year) Total construction spending: -4% to +2% Materials costs: 0% to +8% Labor costs: +3% or less 13 Source: Author

AGC economic resources ( The Data DIGest: weekly one-page (sign up: PPI tables: ed monthly State and metro data Stimulus info: Webinars (May 4 w/ AIA, Reed) Feedback on stimulus, credit, costs 14

NABE - Setting the pace in business economics Professional Development Seminar: DC, 4/12-14 Housing and construction session Annual meeting: Denver, 10/9-12 Real Estate/Construction Roundtable Webinars, annual & spring meeting programs Statistics Committee …much more at 15 Source: Prof. Stephen Fuller, George Mason University