b'16 Economic Update (continued from pg 15)financial margins, so relief in this area will be helpful. increase in regulatory oversight. As a result, certain contractors have become vulnerable to a lack of work, Construction rebounds and they are quite concerned about 2025. AnalystsexpectconstructioncompaniesandA change in fortune will not happen overnight. With manufacturers to share in the nationwide economiclower interest rates, therell be an easier time lining up upsurge.Economistsexpecthealthygrowthinproject financing at acceptable cost, said Basu. But housing activity, a mighty driver for the economy. Wethese things take time. We might see some softness forecast housing starts to increase by 6.2% in 2025,in a meaningful fraction of contractors in 2025. And after falling by 4.7% in 2024 and declining 8.4% inthen perhaps things get a bit better in 2026 as these 2023, said Yaros. lower interest rates prompt more activity.Whytherebound?AdeclineinthecostofmoneyHealthy employmentandaconcomitantlooseningofcreditstandards. Lowermortgageratesshouldhelpthesingle- The economy does better when people are optimistic, familyhomemarket,saidBillConerly,Principalofsince consumer spending accounts for a large portion hisownconsultingfirminLakeOswego,Oregonofthenationsbusinessactivity.Whileconsumers (conerlyconsulting.com). It will be a little less painfulremain troubled by the residual effects of inflation in for people with 3% or 4% mortgages to give them up,the form of high prices for gas and groceries, they sell their current houses and move up. remain in a fairly good mood. We look for consumer confidence to move slightly higher in 2025, said Scott Housing is not the only construction sector that willHoyt,SeniorDirectorofConsumerEconomicsfor dowell.Thisistheeraofthemegaproject,andMoodys Analytics (economy.com). Dedicated to keeping its members at the forefront in their industryfuture prospects are quite positive for contractors who areabletoparticipateinmajorpublicworks,saidWhy the optimism? Healthy employment levels. We Anirban Basu, Chairman & CEO of Sage Policy Grouplook for the unemployment rate to end 2025 at 4.3% (sagepolicy.com). Basu noted that much constructionand2026at4.2%,saidYaros.Thisisroughlyin activityisbeingdrivenbythere-emergenceofline with the 4.1% reported toward the end of 2024. industrialpolicymakinginAmerica,aneconomic(Many economists peg an unemployment rate of 3.5% transformation that has led to programs such as theto 4.5% as the sweet spot that balances the dual Inflation Reduction Act, the Chips and Science Act,risksofinflationarywageescalationandeconomic and the Infrastructure Investment and Jobs Act.recession.) ManufacturersarereceivingbillionsofdollarsinIffavorableunemploymentfigureswillencourage subsidiesforlarge-scaleinfrastructureprojects,consumerspending,employersshouldalsoenjoy computerchipandbatterymanufacturingplants,relief from the deleterious effects of the past years tight and data centers, many in support of technologicallaborconditions.Whilemanycontractorscontinue transformationsuchasthegrowthofartificialto view the lack of skilled labor as their number one intelligence, said Basu. challenge, it is not necessarily of the same magnitude as a year ago, said Basu. The number of available Forcontractorsdependentuponmultifamilyunskilledjobopeningshasshrunk,particularlyin construction,hotels,orretrofitsofexistingofficeconstruction, thanks to a slowing economy, so hiring space, the 2025 outlook is a bit more bleak. Highhasslowed.Residentialcontractorsinparticular interest rates have led to very high financing costs,appear to be looking for fewer workers.alongwiththegeneralinflationexperiencedwithin the construction sector, said Basu. And banks haveSoftening employment growth has given workers less become more reluctant to lend, partly because of anbargainingpower,soemployersareexperiencing continued on pg.17The InsulatorDecember 2024'