Overall Economy to See Mild Gains in 2014
Source: Institute for Trend Research,
Compiled by Katy Devlin
“The United States is making positive economic headway,” says Jeff Dietrich, senior analyst for ITR Economics. All 10 major benchmarks of macroeconomic activity are currently in the recovery or growth phases, according to the ITR Trends 10 report, which measures the current status of these benchmarks as they move through the business cycle. No segment is currently in recession. “There is no collapse on the horizon,” Dietrich reports.
The overall U.S. economy will experience a slight contraction in the latter half of 2014, according to ITR, but Dietrich advises companies to not let this deter plans for growth. “Dwelling on negative input and media, combined with a softer 2014, might lead some decision makers into an overly conservative stance,” Dietrich says. “Instead, we encourage business leaders to use the coming year to retool your marketing strategy, strengthen your sales team, eliminate bottlenecks, and improve procedures to maximize both customer satisfaction and profit per transaction. This will require the expenditure of funds (IT and machinery upgrades) and/or hiring and training in upgrading and enhancing existing skill sets. We suggest that you use 2014 to search for the key people who will help you grow in a busier 2015 and beyond.”
The construction market
“Nonresidential and residential construction will slow through the year and end flat, as the cost of borrowing rises,” he predicts. “There are still headwinds in this economy, but growth will continue through 2014 into 2015. There is no evidence of a burst of pentup demand. Rather, expect 2014 to see mild … growth, stronger in the first half of the year than the second half.”
Looking at specific building segments, ITR reports that public construction and hospital construction are in the early stages of recovery, Phase A, and private mall construction is experiencing accelerated growth, Phase B. Growth is slowing for office construction, commercial construction and lodging construction, all of which are in Phase C of the business cycle.
“Vacancy rates for office and retail space remain just below historic highs,” Dietrich says. “Public construction—schools, federal, institutions—is gaining ground slowly on improved tax revenues, but budget concerns will keep this sector muted for much of 2014. Banks (big spenders historically) are not expanding on every street corner as in decades past, as more transactions are done via the Internet.
“Housing starts have rebounded nicely, but rising mortgage costs and diminishing investor value will stall the pace of rise,” he continues. “These headwinds are not expected to topple construction gains, just slow its rate of rise.