More than 10 years after the end of the most severe financial crisis since the Great Depression, the U.S. economy is again making history by continuing its longest-ever expansion. Nevertheless, emerging weakness in business investment has been hinting at softening outlays, giving commercial and industrial construction contractors cause for concern, according to aĀ mid-year economic outlookĀ by Anirban Basu, chief economist ofĀ Associated Builders and Contractors.
āGiven that every expansion in U.S. history has ended in recession, leaders of construction firms are rightly wondering when the record-setting expansion will end,ā said Basu. āLooking at conditions on the ground, it likely wonāt be in 2019, but 2020 could be problematic for the broader economy and 2021 for a significant number of contractors.ā
Basu cites numerous vulnerabilities that could trigger a recession in 2020, including:
ā Trade wars
ā Softening corporate earnings
ā Slowing job growth
ā Elevated levels of household, corporate and government debt
ā Election 2020
But there are plenty of reasons to remain optimistic. āFor the most part, the economy has held up better than anticipated,ā said Basu. āDuring theĀ first quarter of 2019, gross domestic productĀ expanded at a smart 3.1% annualized rate. The U.S. Bureau of Economic Analysisā initial estimate suggests that the economy slowed to 2.1% growth during theĀ second quarter, but that neatly beat economistsā expectation that that growth had fallen below 2%.ā
āThe economy could continue to prove resilient,ā says Basu. āTo date, the economy has navigated ongoing trade disputes and associated tariffs with aplomb. It has also withstood serial interest rate hikes, the longest federal government shutdown in history, extreme weather, shifting immigration policy, ongoing labor market shortages and a lengthy investigation regarding foreign influence in U.S. elections.ā
To read the full economic outlook story, visitĀ ConstructionExec.com.
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