August 2014

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August 2014 | Construction Equipment Distribution | www.cedmag.com | 39 Construction Overview have begun to recover from the steep losses of the past seven to 10 years, many properties have yet to be reas- sessed. Even when school districts and local governments do receive higher revenues, they have many competing priorities for spending. In addition, much of the spending that occurred before the recession was in areas experiencing a population influx. Since the recession, migration has slowed dramatically, and a greater share of school-age population is now in cities and older, close-in suburbs that often have underused or vacant schools. Thus, school construction is unlikely to track population growth to the degree that it did last decade. Higher education spending will also remain subdued. The number of high school graduates has declined slightly from the peak of last decade. More of those graduates are hesitating to enroll in expensive colleges that will leave them with huge student debts after graduation, particularly now that they can take online courses for nominal cost. Therefore, many colleges are likely to hold off expansion and moderniza- tion spending. :KHUH'RHV7KDW/HDYH8V" Adding up the pieces, it looks as if total construction spending in 2014 will be 5 to 9 percent higher than in 2013, with growth over the next three years hovering in the same range. Private residential spending, which jumped 20 percent in 2013, will decelerate to 10- to 12-percent growth this year and single-digit growth over each of the next three years. Private nonresidential spending is likely to pick up from last year's 1 percent gain to eight to 10 percent in 2014 and additional single- digit growth in 2015 through 2017. But the overall growth will be held down by continuing small declines each year in public spending, which fell 3 percent in 2013 and is likely to do only slightly better this year. The mixed outlook for spending, by category and region, will affect construction employment as well. Experienced project managers, supervisors and heavy equipment operators are likely to be hardest to attract and retain, especially in areas where there is competition from oil and gas industries. Workers for high- way and general building construc- tion will be less in demand. But even those employers will face the challenge of finding replacements for retiring workers from a diminished pool of new labor-force entrants, whether coming out of school, the military or other countries. KEN SIMONSON is chief economist of Associ- ated General Contractors of America. He can be reached at simonsonk@ agc.org.

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