b'16 ECONOMIC UPDATEcontinuedfrom pg. 14with better homes would require walking away from those mortgages to take on new ones at 7%. I think well see this trend continue for another year, but I think well also see a lot of strength in remodeling, and that will be financed probably with home equityPREPARE FOR A SOFT LANDINGlending or second mortgages. U.S. Gross Domestic Product Keeping watch (GDP) Annual % ChangeIn the opening months of 2024, economists are2014: 2.3%advising construction companies to keep an eye on2015: 2.7%some key statistics to get an idea of how the year will turn out. One leading indicator the construction2016: 1.7%companies should look at is the level of permits issued2017: 2.2%for various construction activities, whether they are single family homes, apartments, or non-residential,2018: 2.9%said Basu. Another would be the Architecture Billings2019: 2.3%Index, which is a reflection of architect activity. If the architects and engineers are busy upstream, it means2020: -2.8% contractors will more likely be busy downstream. 2021: 5.9%While construction companies tend to focus on2022: 2.1%materials prices, which have recently been roughly*2023: 2.1%flat, Basu said that the cost of money has a much greater effect on the bottom line. Pay close attention*2024: 1.4%Dedicated to keeping its members at the forefront in their industryto what Federal Reserve policy makers are sayingEconomists predict slowing growth about inflation early in 2024, and assess how thatfor 2024.will affect interest rates, which are already so high that they foreclose the possibility of many projectsSources: World Bank; *= projections moving forward because they simply dont pencilby Moodys Analytics.out anymore.Conerly advises keeping an eye out for two statisticsin Chinas economy, and recurring threats of a federal that might indicate a pending downturn. One is anygovernment shutdown, said Palisin. There are a lot increase in initial claims for unemployment insurance.of spinning plates in the air, and some of them may Another is an inversion of the yield curve, in whichfall and crack.short term interest rates exceed long term ones.Whatever the condition of the tea leaves, businesses in general will encounter a tougher operating environment in 2024, characterized by a need to finesse a tight labor market and reluctant lenders. In the coming year we will face uncertainty about inflation and interest rates, shortages of labor, higher energy costs, a slowdown The InsulatorDecember 2023'