The Time to Invest is Now, Says Economist at GlassBuild
Economist Jeff Dietrich echoed the theme of this year’s GlassBuild America when he said the time is now to invest. “Get off the fence and do things now,” said Dietrich, senior analyst for the Institute for Trend Research. Dietrich spoke Sept. 10 during the 8th annual Glazing Executives Forum, held in conjunction with the GlassBuild America tradeshow in Atlanta.
While the economy, and nonresidential construction, continues its slow climb during the next year or two, interest rates will remain low. However, rates will return to the historic norms of 7 percent to 8 percent in the latter half of the decade. “You only have about 16 months to borrow money at low rates,” said Dietrich. “Make investments now. Hire new people. If you want to borrow money to expand your business or pay down debts to refinance, do it now.”
Looking at the overall economy, Dietrich warned that the industry would not see break-out growth until about 2015. “We are seeing steady, but mild, growth ahead. We don’t see things changing over the next 18 months. However, in 2015, 2016, we’re seeing tremendous growth,” he said. “The key word is growth. We are not in recession.”
Commercial construction is growing at a rate of 2.3 percent in 2013, slightly behind last year’s growth rate of 3.2 percent, Dietrich said. By segment, public construction remains slow, while there are some bright spots: private medical building construction is up 11.5 percent year-over-year, private lodging up 23.5 percent and multifamily residential up 53 percent.
Due to the slow pace of the rebound, nonresidential construction remains “less than half of what it was at the peak,” Dietrich said. “We’re not building as much in square feet, there are not as many projects out there. … This sector is still coming out of recession, and it’s going to take a long time to get back to where we were.”
Despite the hardships of the Great Recession and its aftermath, surviving companies are likely stronger than they were pre-recession, Dietrich said. “Most companies have right sized. Most companies have paid down debt. Everybody has wised up. Businesses are in great shape, compared to where they were,” he said. “Congratulations for making it through the last five years. You’re probably creating something more significant than you know.”