b'20 ECONOMIC OUTLOOK Sheet Metal & Roofing Contractors of the Miami Valley Advisor / Volume 3/ November 2022Published Monthly by ITR Economics Macroeconomic OutlookIndustry Snapshots US Real Gross Domestic Product (GDP) returned to record-high territory, expanding by 0.64% from the second to third quarter after Arrow denotes 12-month moving total/average direction. posting mild contraction for the first two quarters of 2022. GDPs third-quarter rise stemmed from multiple components. Consumer spending expanded on net, with rise in spending on services offsetting decline in spending on goods. The trade deficit, which had RETAIL SALES been generally growing since mid-2020, shrank in the third quarter, and government expenditures and investments rose. Private investment, which includes investment in intellectual property and construction, declined. Generally speaking, GDP has been relatively WHOLESALE TRADE flat this year, and we expect this flatness to persist in the coming quarters.The Federal Reserve lifted rates in early November for a total AUTO PRODUCTION increase of 375 basis points year to date. Rising interest rates have the potential to hinder consumer spending, capex, and other investments. However, rising interest rates adverse impacts are not MANUFACTURING often immediate; the risk is greater to our longer-term GDP outlook than to the 2023 outlook. For your business, understand that higher borrowing costs are not necessarily reason to halt investments. Given the tight labor market, investments that will help limit your ROTARY RIG dependence on labor will likely prove worthwhile, as will those that improve your efficiencies.The Federal Reserves actions are also spurring rise in mortgage CAPITAL GOODS rates. 30-Year Fixed Mortgage Rates have surpassed 7%, a level not seen in just over 20 years. US New Homes Median Sales Prices, Dedicated to keeping its members at the forefront in their industryat $470 thousand as of September, are just below the July record high. Taken together, these affordability constraints are softening NONRESIDENTIAL CONSTRUCTION demand in the residential construction market. Single-Unit Housing Starts, below year-ago levels, are contracting and likely to trend below 2021 levels next year. Multi-Unit Housing Starts are faring RESIDENTIAL CONSTRUCTION better. Multi-Unit Starts will mildly decline during the first half of 2023, but the market will remain generally strong as affordability issues keep some consumers from entering the Single-Unit market. While trends will vary by region, you will likely find relatively greater opportunity in the Multi-Unit market next year.For your business, understand that higher borrowing costs SteepMild Rise Flat MildSteep Rise Decline Decline are not necessarily reason to halt investments.We will not see a pricing crash in housingvery tight inventories and low homeowner vacancy rates will keep prices elevatedbut we are beginning to see pricing corrections in areas that posted rapid housing price increases throughout the pandemic. Affordability constraints, however, will linger. If your business is related to residential construction, understand that the booming housing market of 2021 is shifting. Make sure you account for this while planning for your business.ITReconomics.com 2022 All Rights Reserved 1The InsulatorDecember 2022'