b'CONSTRUCTION FORECASTContinued from page 34The future will be bright for those contractorsto keep the natin from tipping into a recession? aligned with mega projects in infrastructure andMoodys Analytics believes that the nation will computer chip manufacturing. The picture is lessavoid a recession in 2024, attributing its forecast bright for other contractors aligned to markets suchof a soft landing to resilience in labor markets and as offices, hotels and shopping malls. We knowconsumer confidence.we have many millions of square feet of distressedBasu, however, is among the economists taking a office inventory in this country that frustrates newcontrary view. I believe the US economy will be construction, said Basu. Many owners of thesein recession by at some point in 2024, he said. A office buildings are taking enormous losses on thenumber of factors, including a very strong consumer value of their properties and are having to refinanceand employers willing to hire more people and raise their debts at a time when interest rates are highwages, have allowed the US economy to retain and bankers are reluctant to expose themselvesmomentum. But major structural issues suggest to the vagaries of commercial real estate. the economy will weaken, including those higher Battling inflation interest rates.Reports from the field confirm the economistsFeeling goodreadings. Our members are experiencing a businessThe public mood is a strong driver of the economy. slowdown, due largely to the effect of increasingAnd here the news is good. Consumer confidence interest rates, said Tom Palisin, Executive Directorhas been trending higher, and I think prospects of The Manufacturers Association, a York, Pa.,- are good for it to improve next year, said Scott based regional employers group with more thanHoyt, Senior Director of Consumer Economics for 370membercompanies(mascpa.org).WhileMoodys Analytics (economy.com). Things should businesses understand the need for higher interestnormalize as the economy continues to grow and rates, they nevertheless hope for early relief. Ifgas prices stabilize.inflation does not continue to drop, interest ratesAn impressive level of accumulated debt, though, will have to be increased further, which will be ais hanging like a dark cloud over the consumer big problem, said Palisin.landscape. With credit card debt now above a So are the Federal Reserves efforts paying off?trillion dollars with more consumers having to start Theres some good news here, as well as a sunnypaying back student loans and with evidence of forecast. Moodys Analytics expects year-over-yearslowing labor markets becoming more pervasive, consumer price inflation to average 3.2% whentheres every reason to believe that the pace of 2023 numbers are finally tallied, down from overconsumer outlay growth will soften going forward, 6% a year earlier. Moreover, the number shouldsaid Basu. continue to drop until it reaches the Feds targetFortheimmediatefuturethough,consumer rate of 2% late in 2024. (These figures represent theconfidence seems secure, due primarily to the core personal consumption expenditure deflatorhealthy job market. The unemployment rate has (PCED), which strips out food and energy pricesbeen very low, bouncing around between 3.5% and is the Federal Reserves preferred measureand 3.8% for some time, said Hoyt. A slowdown in of inflation). job growth orchestrated by the Federal Reserves Indeed, Moodys Analytics believes the Fed willinterest rate hikes should moderate things. We start to lower interest rates around June of 2024,think unemployment will trend upward a bit, ending although more slowly than previously anticipated2023 around 3.9% and 2024 around 4.2%. (Many because of persistent inflation and ongoing laboreconomists peg an unemployment rate of 3.5% to market tightness. Cuts of about 25 basis points4.5% as the sweet spot that balances the risks of per quarter are expected over the next few yearswage escalation and economic recession.)until the Federal Funds Rate reaches 2.75% by theLow unemployment may fuel happy sentiments fourth quarter of 2026 and 2.5% in 2027. among citizens, but it presents employers with two Will that de-escalation of interest rates be enoughpractical challenges. The first is the need to raise Continued on page 36www.mrca.orgMidwest Roofer 35'